A Note Receivable Is Issued in December, with Interest Due

question 108

Multiple Choice

A note receivable is issued in December, with interest due at maturity. When the note is paid the following February, the payee's entry includes (assuming a calendar-year accounting period when adjusting entries are recorded) a

• A)credit to Interest Receivable.
• B)credit to Cash.
• C)debit to Notes Receivable.
• D)debit to Interest Revenue.

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Definitions:

Tax

A necessary tax or other charge placed on individuals by a government agency, with the purpose of generating revenue for government operations and miscellaneous public outlays.

Tax Revenue

The income that is collected by governments through taxation, which supports public spending and services.

Government

The organization, or system by which a community or nation is governed, responsible for creating and enforcing laws.

Consumer Surplus

The offset between what customers are willing and able to pay for a service or product and what they actually expend.