An Amortizing Loan Is One in Which

question 15

Multiple Choice

An amortizing loan is one in which:

• A) the principal remains unchanged with each payment.
• B) accrued interest is paid regularly.
• C) the maturity of the loan is variable.
• D) the principal balance is reduced with each payment.

---

Definitions:

Variable Expenses

Expenses that vary directly with the level of production or sales, such as raw materials and direct labor costs.

Fixed Expenses

Costs that do not fluctuate with the level of production or sales, including rent, salaries, and insurance premiums.

Contribution Margin Ratio

A financial metric that indicates the portion of sales revenue that exceeds variable costs, expressed as a percentage of total sales.

Fixed Expenses

Fixed expenses are costs that do not change with the volume of output, such as rent or salaries, providing stability in financial planning but requiring effective budget management.