International Baccalaureate (IB) Practice Exam

An interest-bearing account is defined as one that generates interest income on the available balance.

1. True

2. False

The correct answer is: True

An interest-bearing account is indeed one that generates interest income based on the available balance. This type of account allows the account holder to earn interest on their deposited funds, which is usually calculated on a periodic basis, such as daily, monthly, or annually. The interest earned is typically expressed as an annual percentage rate (APR) or annual percentage yield (APY), reflecting how effectively the funds can generate returns over time. In a true interest-bearing account, the financial institution pays the account holder interest as a reward for keeping their money deposited. This contrasts with non-interest-bearing accounts, where funds placed in the account do not earn any interest income, providing no additional financial benefit to the account holder. Thus, the definition aligns perfectly with the nature of an interest-bearing account, confirming that the statement is accurate.