Accompanying the Bank Statement Was a Debit Memo for an NSF

question 141

Multiple Choice

Accompanying the bank statement was a debit memo for an NSF check received from a customer. What entry is required in the company's accounts?

• A) debit Other Income; credit Cash
• B) debit Cash; credit Other Income
• C) debit Cash; credit Accounts Receivable
• D) debit Accounts Receivable; credit Cash

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Definitions:

Agency Problem

A conflict of interest between the principals, such as shareholders, and the agents managing the company, like executives or managers.

Empire Building

A strategy where a company's executives expand their organization's size and operations, often to increase power and control, regardless of shareholder benefit.

Corporate Jets

Private aircraft owned or leased by corporations for the purpose of transporting executives and employees, often to support business operations more efficiently.

Real Assets

Physical or tangible assets such as real estate, commodities, or natural resources that have intrinsic value.