A Company Lends a Major Client $90,000 for One Year

question 41

Multiple Choice

A company lends a major client $90,000 for one year at a 7% annual interest rate. Interest payments are t o be made twice a year but the company wants to recognize interest earned on a monthly basis. On a month in which the company does not receive any interest payments, interest is recorded with:

• A) a debit to Cash of $525 and a credit to Interest Revenue of $525.
• B) a debit to Notes Receivable of $525 and a credit to Cash of $525.
• C) a debit to Interest Receivable of $525 and a credit to Interest Revenue of $525.
• D) no adjusting entry, since no transaction has occurred.

Know the conditions under which gifts can be made and their legal effects.

Distinguish between real and personal property and the concept of fixtures.

Identify the various types of insurance and the principles underlying coinsurance.

Recognize the significance of insurable interest and legitimate defenses in insurance policies.

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Definitions:

Religious Divisions

Deep-seated discord or conflict arising from differences in religious beliefs, practices, or identities, often resulting in social or political separation.

Don Quixote

A classic novel by Spanish writer Miguel de Cervantes, telling the story of a nobleman who becomes a self-styled knight errant, embarking on a series of fantastical adventures.

Spain's National Decline

A period in the early modern era marked by economic troubles, military defeats, and loss of empire, often associated with the Habsburg rule's latter centuries.

Spanish Inquisition

An institution established by the Catholic Monarchs of Spain in 1478 to maintain Catholic orthodoxy within their kingdoms and used for the persecution of heretics and other religious minorities.