Which term is defined as the paying off of a debt in regular installments over a period of time?

Which term is defined as the paying off of a debt in regular installments over a period of time?

• A. Amortization
• B. Accrued interest payable
• C. Balance Sheet
• D. Current Ratio

Answer: (A)

Amortization is the process of paying off a debt through regular, scheduled payments over a set period. Each payment typically includes both interest and a portion of the principal, so over time the loan balance decreases until it’s fully repaid. The pattern of payments is called an amortization schedule, which shows how much of each payment goes to interest versus principal and how the balance declines. The other terms don’t describe this repayment process: accrued interest payable is a liability for interest that has accumulated but hasn’t yet been paid; a balance sheet is a financial snapshot of assets, liabilities, and equity at a moment in time; the current ratio is a liquidity measure comparing current assets to current liabilities.

Amortization is the process of paying off a debt through regular, scheduled payments over a set period. Each payment typically includes both interest and a portion of the principal, so over time the loan balance decreases until it’s fully repaid. The pattern of payments is called an amortization schedule, which shows how much of each payment goes to interest versus principal and how the balance declines.

The other terms don’t describe this repayment process: accrued interest payable is a liability for interest that has accumulated but hasn’t yet been paid; a balance sheet is a financial snapshot of assets, liabilities, and equity at a moment in time; the current ratio is a liquidity measure comparing current assets to current liabilities.