A Note Receivable Is Executed in December

question 3

Multiple Choice

A note receivable is executed in December. When the note is paid the following February, the payee's entry includes (assuming a calendar-year accounting period and no reversing entries) a

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

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Definitions:

Profit Difference

The financial disparity that occurs when the revenues earned by a business exceed or fall short of its expenses.

Incoming Cash

Money that is received by a business or individual, originating from various sources like sales, investments, loans, or other income.

Outgoing Cash

Money that is spent or disbursed by a business, including expenses, purchases, and other payments.

Manufacturing Business

A type of business that changes basic inputs into products that are sold to individual customers.