John Cashed in an Annuity Contract and Received $10,000

question 34

True/False

John cashed in an annuity contract and received $10,000.John bought the contract 24 years ago for $5,000.These amounts indicate a contract rate of approximately 3%.

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Definitions:

Accrued Interest

Interest that has been earned but not yet received in cash or recorded as an asset on the balance sheet.

Note Receivable

A financial asset representing a written promise to receive a specific amount of money on a certain date or on demand.

Payment of Account

The process of settling a liability or an amount owed to a creditor, vendor, or supplier by making a cash or electronic payment.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its credit sales, calculated as sales divided by average accounts receivable.