Bison Corp

question 48

Multiple Choice

Bison Corp. issues a 5 year 8%, $60,000 note payable on March 1. The terms of the note include monthly blended principal and interest payments of $1,217. The entry to record the second instalment payment will show a:

• A) debit to Interest Expense for $400.
• B) credit to Interest Expense for $395.
• C) debit to Notes Payable of $822.
• D) debit to Cash for $1,217.

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Checking Account

A bank account that allows the depositor to withdraw funds using checks or electronic debit, typically used for day-to-day expenses.

Receive Payment

The process of collecting money from a customer to settle an outstanding invoice.

Aging of Accounts Receivable

A method used to categorize the amounts owed by customers based on the length of time an invoice has been outstanding.