Accounting and Finance Questions

Repo Rate is the rate at which the commercial banks borrows money from the central bank of a country i.e, RBI in India.

Reverse Repo Rate is the rate at which the central bank of a country, in case of India it is RBI borrows money from the commercial banks in the country.

The journal entry to record a credit sale is Accounts Receivable. Credit sale is nothing butthe customers pay at the time of buying.

Intangible asset that consists of original creative work manifested in a tangible form that can be legally protected. Intellectual property consists of copyrights, patents, trade-marks and trade secrets. Examples include literary or artistic works, business methods and industrial processes.

Assets minus liabilities equals Equity.

In economy, the currency value depends on imports and exports, inflation, employment, interest rates, growth rate, trade deficit, performance of equity markets, foreign exchange reserves, macroeconomic policies, foreign investment inflows, banking capital, commodity prices.

The principle of diversification tells us that spreading an investment across many diverse assets will eliminate some of the total risk.

Compounding interest means interest accrues on the interest charged and the principal amount each period the interest is charged.

Compound interest is calculated by multiplying the principal amount by one plus the annual interest rate raised to the number of compound periods minus one.The total initial amount of the loan is then subtracted from the resulting value.

The formula for calculating compound interest is:

[P (1 + i)n] – P

= P [(1 + i)n – 1]

(Where P = Principal, i = nominal annual interest rate in percentage terms, and n = number of compounding periods.)

Take a three-year loan of Rs. 10,000 at an interest rate of 5% that compounds annually. What would be the amount of interest? In this case, it would be:

Rs. 10,000 [(1 + 0.05)3] – 1

= 10,000 [1.157625 – 1]

= Rs. 1,576.25.

How it grows ::