Which of the Following Methods Calculates Interest on the Full

question 51

Multiple Choice

Which of the following methods calculates interest on the full amount of the original principal?

• A) Declining balance method
• B) Add-on interest method
• C) Simple interest method
• D) Adjusted balance method
• E) Average daily balance method

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Definitions:

Balance Sheet

A financial report that captures a company's financial status at a particular moment, detailing its assets, liabilities, and shareholders' equity.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide the preparation and presentation of financial statements on a global scale.

GAAP Format

The presentation of financial statements in accordance with Generally Accepted Accounting Principles, ensuring consistency and comparability.

Fair Value

The estimated price at which an asset could be bought or sold in a current transaction between willing parties, other than in a liquidation sale.