The Correct Equation for Calculating the Cost of Short-Term Credit

question 103

Multiple Choice

The correct equation for calculating the cost of short-term credit is [blank].

• A)rate = interest/(principal × time)
• B)rate = (principal × time)/interest
• C)rate = principal/(time × interest)
• D)rate = principal × interest × time

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Definitions:

Journal Entries

Recorded transactions in the accounting books of a business, capturing all the financial activities and their effects on the company's financial position.

Operating Cycle

The period of time it takes for a company to purchase inventory, sell it to customers, and collect the cash from the sale.

Convertible to Cash

Assets or investments that can be quickly and easily converted into cash without significant loss of value.

Southwestern Artwork

Denotes artwork originating from or influenced by the Southwestern United States, often characterized by motifs, landscapes, and themes relevant to the region.