The Jiminez Company Accepted an Interest-Bearing Note to Settle a Past-Due

question 20

Multiple Choice

The Jiminez Company accepted an interest-bearing note to settle a past-due account originating from a sale of merchandise.When the note is collected,the interest earned should be credited to

• A) Interest Income.
• B) Sales.
• C) Allowance for Doubtful Accounts.
• D) Notes Receivable.

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Definitions:

FASB

The Financial Accounting Standards Board, which is responsible for developing accounting standards in the United States.

Accounting Assumptions

The foundational principles that guide the preparation of financial statements, including going concern, accrual basis, and monetary unit assumptions.

Conventions

Agreed-upon practices or methodologies in accounting and finance that ensure consistency and compliance with standards.

Principles

In the context of accounting, principles refer to the fundamental guidelines or rules that govern the practice of accounting.