Which describes the difference between simple and compound

Question:

Which describes the difference between simple and compound interest?

A. Simple interest is paid on small, short-term loans, while compound interest is paid on large, long-term loans.

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

C. Simple interest is paid on large, long-term loans, while compound interest is paid on small, short-term loans.

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

Answer:

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