If You Were to Start a Business Delivering Documents,you Might

question 3

Multiple Choice

If you were to start a business delivering documents,you might need to purchase cell phones,bicycles,desks,and chairs.

• A)These purchases are called capital investment.If you raise the funds to purchase them from others you are a saver.
• B)These purchases are called capital investment.If you raise the funds to purchase them from others you are a borrower.
• C)These purchases are called consumption.If you raise the funds to purchase them from others you are a saver.
• D)These purchases are called consumption.If you raise the funds to purchase them from others you are a borrower.

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Definitions:

Accounts Payable

Liabilities or money owed by a business to its creditors or suppliers for goods and services received.

Non-interest Bearing

Refers to debt or a financial instrument that does not accrue interest over time, meaning the borrower only repays the principal amount.

Loan Receipt

The documentation acknowledging the receipt of funds borrowed from a lender.

Effective-Interest Method

The effective-interest method is a financial accounting technique used to allocate loan or investment interest payments and premium/discount adjustments over the relevant period, providing a more accurate representation of financial performance.