The Method of Calculating Interest Once During the Entire Life

question 44

Multiple Choice

The method of calculating interest once during the entire life of the loan,on the original sum borrowed,is known as:

• A)simple interest
• B)interest on interest
• C)compounding
• D)rule of 72
• E)compound interest

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Definitions:

Fiscal-Year End

The completion of a one-year, or 12-month, accounting period used by governments and businesses for financial reporting and budgeting.

Automatic Extension

An extension of time granted by the IRS for filing tax returns without needing to file a request form.

C Corporation

A legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity.

Return

A document containing details about an individual's or entity's income, deductions, and tax liabilities filed with the tax authorities.