A loan payment includes $1,100 principal and $280 interest. Which amount is expense?
Correct Answer
C) $280.
Interest is the expense; principal reduces the loan liability.
Why This Is the Correct Answer
Interest is the expense; principal reduces the loan liability.
Why the Other Options Are Wrong
Option A: $1,100.
$1,100. is above the supported result for loan accounting; it likely adds an unsupported amount or compares the wrong financial base.
Option B: $1,380.
$1,380. is above the supported result for loan accounting; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $820.
$820. is above the supported result for loan accounting; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Coding Payment money test: bucket before math for loan accounting.
Reference Hint
Study anchor (closed-book): memorize Loan accounting from CSLB Law and Business Study Guide; CSLB 2026 Law Book / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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