Interest Earned on Both the Initial Principal and the Interest

question 10

Multiple Choice

Interest earned on both the initial principal and the interest reinvested from prior periods is called:

• A)free interest.
• B)dual interest.
• C)simple interest.
• D)interest on interest.
• E)compound interest.

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Definitions:

Schedule K-1

A tax document used to report the income, losses, and dividends of a partnership or S corporation's partners or shareholders.

Separately Stated

Items on a partnership or S corporation tax return that must be reported separately on the owners' personal tax returns.

Taxable Dividend

A dividend paid to shareholders that is subject to income taxation.

Corporate Earnings And Profits

The measure of a corporation's ability to generate income over its costs and expenses within a specific period.