On August 1, Amy Company Borrowed $40,000 from Another Company

question 113

Multiple Choice

On August 1, Amy Company borrowed $40,000 from another company on a 6%, one-year note. The journal entry that Amy would record on August 1 would include which of the following?

• A)A debit to Notes Receivable for $40,000.
• B)A credit to Cash for $40,000.
• C)A credit to Notes Payable for $40,000.
• D)A debit to Interest Expense for $2,400.

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Definitions:

Direct Materials

The raw materials that can be directly attributed to the production of specific goods or services.

Incremental Revenues

The additional income generated from a new product or service or as a result of making changes to an existing operation.

Fixed Overhead

Regular, predictable costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Variable Overhead

Costs that vary directly with the level of production or business activity.