Compound Interest

question 2

Multiple Choice

Compound interest:

• A)Is interest only on the principal amount for several years.
• B)Is interest on the principal and previously earned interest.
• C)Is interest only on previous interest excluding the principal.
• D)Is equal to simple interest received for several years.

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Definitions:

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, converting them into the number of completed units they represent.

Materials

The raw inputs used in the manufacturing process to create a finished product.

Weighted-Average Method

A cost accounting method that calculates the cost of equivalent units of production by considering the weight of the cost of current and prior periods' goods.

Equivalent Units

A concept used in cost accounting to express the amount of work done by manufacturers in terms of fully completed units.