Question

Which describes the difference between simple and compound interest?

Simple interest is paid on small, short-term loans, while compound interest is paid on large, long-term loans.
Simple interest is paid on the principal, while compound interest is paid on the principal and interest accrued.
Simple interest is paid on large, long-term loans, while compound interest is paid on small, short-term loans.
Simple interest is paid on the principal and interest accrued, while compound interest is paid only on the principal.

Answer 1

Simple interest is paid on the principal, while compound interest is paid on the principal and interest accrued.