A. It is the most basic form of calculating interest.
B. It earns profit not only on principal but also on interest.
C. It is calculated by multiplying principal by rate multiplied by time.
D. It does not take into account the accumulated interest for calculation.
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PLEASE COMMENT BELOW WITH CORRECT ANSWER AND ITS DETAIL EXPLANATION.
Which of the following statement is CORRECT regarding compound interest?
Option B. It earns profit not only on principal but also on interest.
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the above MCQs is wrong. the above statement is correct for simple interest
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Which of the following statement is CORRECT regarding compound interest?
A. It is the most basic form of calculating interest.
B. It earns profit not only on principal but also on interest.
C. It is calculated by multiplying principal by rate multiplied by time.
D. It does not take into account the accumulated interest for calculation.
You marked C is the answer but the right answer is B.
Explanation: definition of simple interest – It is calculated by multiplying principal by rate multiplied by time.
definition of compound interest- It earns profit not only on principal but also on interest.
Reference: Financial Accounting-1 and 2 written by Miegs Walliam-Eleventh Edition
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The Correct answer of this MCQ is “B”.
as per your answer “C” showing the detail of Simple Interest.
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