How Will an Increase in the Efficiency of the Payments

question 88

Multiple Choice

How will an increase in the efficiency of the payments mechanism effect velocity?

• A)Velocity will decrease.
• B)Velocity will increase.
• C)Velocity will remain constant.
• D)Velocity is unrelated to payments.

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Definitions:

Double-Entry System

An accounting method that requires every financial transaction to be recorded in at least two accounts—where one account is debited and another is credited—to ensure accuracy and balance in the financial records.

Salaries Expense

The total amount paid to employees for services rendered during a specific period, typically recorded as an operating expense.

Accounts Payable

Debts incurred by a company towards its suppliers, reflected as liabilities on its balance sheet.

Prepaid Insurance

An asset account that represents insurance paid in advance, which is not yet expired and thus not yet an expense.