Which One of the Following Statements Is True About Amortization

question 64

Multiple Choice

Which one of the following statements is true about amortization?

• A) With an amortized loan, a bigger proportion of each month's payment goes toward interest in the early periods.
• B) With an amortized loan, a bigger proportion of each month's payment goes toward interest in the later periods.
• C) With an amortized loan, a smaller proportion of each month's payment goes toward interest in the early periods.
• D) None of the above.

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Definitions:

Declaration of Solvency

A statement made by the directors of a company declaring that they have assessed the company's financial situation and believe it can meet its financial obligations for the foreseeable future.

Statement of Affairs

A detailed financial report prepared typically in the process of liquidation, showing the assets and liabilities of a company at a specific date.

Charged Assets

Assets that are used as security or collateral for a loan or obligation, ensuring the lender has rights to the asset if the borrower defaults.

Secured Creditor

Someone who has a ‘charge’ over some or all of the company’s assets, to secure a debt owed by the company.