A credit card is advertised with an annual percentage rate (APR) of 24%. The advert also states that interest on the credit card is calculated quarterly. a) Using the information above, explain the difference between the APR and the effective annual rate (EAR).

A credit card is advertised with an annual percentage rate (APR) of 24%. The advert also states that interest on the credit card is calculated quarterly. a) Using the information above, explain the difference between the APR and the effective annual rate (EAR).

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 14MC: Ancient Grains Unlimited has an accounts receivable turnover ratio of 3.34 times. The net credit...

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Concept explainers

Credit card

A credit card is provided by financial institutions or banks, which permits a person to borrow money on a preapproved limit for purchases on a credit basis. The credit limit is decided by the institution and bank which issues a credit card depending on the person’s credit score and income. A cardholder can use the card for credit purchases, a balance transfer, cash advances.

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