The Checking Account of a Small Healthcare Business Pays Interest

question 23

Multiple Choice

The checking account of a small healthcare business pays interest each day the balance in the account exceeds $1,000. The bank credits the account with the accumulated interest at the end of each month. How should the interest income be posted?

• A) As a credit to Cash and a debit to Interest Income
• B) As a credit to Interest Income and a debit to Cash
• C) As a credit to Miscellaneous Income
• D) As a credit to Short-Term Investments

---

Definitions:

Cash Price

The amount of money that a buyer pays to purchase a good or service when paying in cash instead of using credit or financing.

Book Value

The net value of a company's assets minus its liabilities, often used to assess the company's underlying value.

Common Share

Equity securities that represent ownership in a corporation, providing voting rights and a share in the company's profits via dividends.

Stockholders' Equity

The residual interest in the assets of a corporation remaining after deducting its liabilities, representing the ownership interest of the shareholders.