At an Effective Annual Interest Rate of 20%,how Many Years

question 7

Multiple Choice

At an effective annual interest rate of 20%,how many years will it take a given amount to triple in value? (Round to the closest year.)

• A) 5
• B) 8
• C) 6
• D) 10
• E) 9

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Definitions:

Allowance for Doubtful Accounts

A contra-account reducing accounts receivable to reflect the estimated portion that may not be collected.

Uncollectibles

Debts owed to a company that are considered unlikely to be paid and are therefore written off as a loss.

Income Statement Approach

A method to prepare the bad debt expense by estimating uncollectible accounts at the end of each period based on expected losses.

Accounts Receivable

Represents the money owed to a company by its customers for goods or services delivered on credit.