The Total Amount of Simple Interest Calculated Annually on a $6,000

question 183

Multiple Choice

The total amount of simple interest calculated annually on a $6,000 note payable for 3 years at 11% is

• A) $1,980
• B) $2,205
• C) $6,600
• D) $7,980

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Definitions:

Debit Side

The left side of an accounting ledger where increases in assets and expenses or decreases in liabilities and equity are recorded.

Normal Balance

The side of an account (debit or credit) where increases in the account are recorded, reflecting the account's usual positive balance.

Expense

Outflows or other using up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.

Credit

A bookkeeping entry that increases the value of liabilities or equity accounts, or decreases the value of an asset or expense account.