What is the term for a payment made at the end of a period to cover charges incurred during that time?

What is the term for a payment made at the end of a period to cover charges incurred during that time?

• A. Advance payment
• B. Installment payment
• C. Arrears
• D. Down payment

Answer: (C)

The term for a payment made at the end of a period to cover charges incurred during that time is "arrears." This term specifically refers to the concept of money that is owed after services have been rendered or expenses have been incurred. For example, if a tenant pays rent at the end of a month for that month’s occupancy, they are paying in arrears since the payment is made after having used the space. In contrast, an advance payment refers to money paid upfront for goods or services that will be received in the future. An installment payment is typically a portion of a total amount that is paid over a period, rather than a single end-of-period payment. A down payment is a percentage of the total cost of an asset that is paid upfront, usually at the time the purchase is made, and is not related to covering charges already incurred. Understanding these distinctions underscores why "arrears" is the appropriate term for payments made at the end of a period.

The term for a payment made at the end of a period to cover charges incurred during that time is "arrears." This term specifically refers to the concept of money that is owed after services have been rendered or expenses have been incurred. For example, if a tenant pays rent at the end of a month for that month’s occupancy, they are paying in arrears since the payment is made after having used the space.

In contrast, an advance payment refers to money paid upfront for goods or services that will be received in the future. An installment payment is typically a portion of a total amount that is paid over a period, rather than a single end-of-period payment. A down payment is a percentage of the total cost of an asset that is paid upfront, usually at the time the purchase is made, and is not related to covering charges already incurred. Understanding these distinctions underscores why "arrears" is the appropriate term for payments made at the end of a period.