Which of the Following Statements Is True

question 3

Multiple Choice

Which of the following statements is true?

• A)To conserve resources, it is best if the owner uses one Checking account for both personal and business purposes
• B)To maintain separation between the personal and business accounting records, the owner's personal Checking account should not be used to pay bills for the business and should not be listed in the business' Chart of Accounts
• C)To maintain more consistent records, it is best if the owner maintains a separate personal Checking account, but both the owner's personal Checking and business Checking accounts are listed in the Chart of Accounts
• D)None of these

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Definitions:

Compound Interest

Interest earnings calculated on the base principal along with any interest that has previously accumulated from past periods on that principal.

Straight-Line Depreciation

A method of calculating the depreciation of an asset which spreads the cost evenly across the useful life of the asset.

Average Rate of Return on Investment

An investment's return expressed as an annualized percentage, calculating how much an investment has gained compared to its initial cost.

Compound Interest

The interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods of a deposit or loan.