If You Have a $600 Balance on a Credit Card

question 94

Multiple Choice

If you have a $600 balance on a credit card that charges 17% interest compounded monthly, how
Long will it take that amount to reach $3,000 if you don't make any payments?

• A)9.53 years
• B)10.25 years
• C)114.41 years
• D)0.85 years

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Definitions:

Allowance for Doubtful Accounts

An estimate of the amount of accounts receivable that may not be collectible.

Bad Debts Expense

Represents the recognition of accounts receivable that a company is unable to collect, treated as an expense in the income statement.

Uncollectible Accounts

Uncollectible Accounts are receivables that cannot be collected from customers, often written off as a bad debt expense.

Accounts Payable

Short-term financial obligations to vendors or service providers for purchases made on credit.