When You Pay Off the Principal and All of the Interest

question 29

Multiple Choice

When you pay off the principal and all of the interest at one time at the maturity date of the loan, we call this type of loan a(n) ________.

• A) amortized loan
• B) interest-only loan
• C) discount loan
• D) compound loan

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Definitions:

Credit

An accounting entry that increases a liability or equity account, or decreases an asset or expense account. It is also used in banking to denote the addition of funds to an account.

Credit Side

The right side of an accounting ledger, used for recording increases in liabilities, equity, and revenue, and decreases in assets and expenses.

Debit Side

The left side of a ledger account that records increases in assets and expenses or decreases in liabilities and equity.