Which of the Following Statements Regarding the Recording of Interest

question 145

Multiple Choice

Which of the following statements regarding the recording of interest on notes receivable is true?

• A)Interest on notes receivable is recorded as revenue only when the cash is received.
• B)When a company receives an interest payment on a note,the entire payment is debited to interest receivable.
• C)Interest on notes receivable is recognized when it is earned which is not necessarily when the interest is received in cash.
• D)Interest earned but not yet received must be recorded in an adjusting entry which includes a debit to interest revenue.

---

Definitions:

Contaminants

Unwanted particles or substances that pollute or adulterate another material or environment, often leading to reduced performance or damage.

Transmission Lube

A lubricant used in transmission systems to reduce friction and wear between moving parts.

Dirty Lubricant Storage

Refers to the improper storage of lubricants, where they can become contaminated with dirt, debris, or other substances, reducing their effectiveness.

Transmission Oil Level

The volume of oil present in the transmission system, crucial for lubrication and smooth operation.