Multiple Choice
Which of the following types of accounting focuses primarily on providing information to external users such as investors, creditors, and regulatory agencies?
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1. Introduction to Accounting
Types of Accounting
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Which of the following payment options could result in interest being charged to you?
A
Paying with a debit card
B
Paying with cash
C
Paying by check and immediately covering the amount
D
Paying with a credit card and carrying a balance
Verified step by step guidance1
Understand the concept of interest: Interest is a fee charged by lenders for borrowing money, typically associated with credit transactions.
Identify the payment methods listed: Debit card, cash, check, and credit card. Note that debit cards, cash, and checks involve immediate payment or withdrawal from available funds, which do not incur interest.
Focus on the credit card option: Credit cards allow you to borrow money up to a certain limit, and if you do not pay the full balance by the due date, interest is charged on the remaining balance.
Recognize the condition for interest: Carrying a balance on a credit card means you have not paid the full amount owed, leading to interest charges as per the credit card agreement.
Conclude that the payment option resulting in interest being charged is 'Paying with a credit card and carrying a balance,' as it involves borrowing and deferred payment.
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