If the Nominal Interest Rate Is 5 Percent,and the Rate

question 107

Multiple Choice

If the nominal interest rate is 5 percent,and the rate of inflation is 3 percent,then the real interest rate is equal to

• A)2 percent.
• B)0.6 percent.
• C)1.7 percent.
• D)15 percent.

Identify and classify expenses and revenues as either accrued or deferred.

Recognize the importance and implications of adjusting entries in financial reporting.

Distinguish between prepaid expenses and unearned revenues.

Understand how the matching principle applies to revenue and expense recognition.