In preparing an amortization table,it is necessary to include:
A)The original amount of the liability,the amount of periodic payments,and the interest rate.
B)The original amount of the liability,the amount of periodic payments,and the amount of past payments.
C)The monthly payment,the total amount of past payments,and the original amount of the liability.
D)The total amount of past payments,the interest rate,and the amount of periodic payments.

Question

Quizplus · Accepted Answer

In order to prepare an amortization table, we need to know the original amount of the liability, the amount of periodic payments, and the interest rate. These three factors are necessary to calculate the amount of interest and principal in each payment and to track the decreasing balance of the liability over time. The amount of past payments is not needed to prepare the table, although it may be included to show the remaining balance at various points in time.

In Preparing an Amortization Table,it Is Necessary to Include