COMPENSATING ERROR Definition

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COMPENSATING ERROR is the name given to the situation where one mistake cancels out the effect of a second mistake.

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TRANSACTION DATE is the date on which an activity occurs.

CAPITALIZED INTEREST is the accrued interest added to the principal balance of a loan while you are not making payments or your payments are insufficient to cover both the principal and interest due. When this occurs, you are paying interest on interest, sometimes called "negative amortization".

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