Helen's Home Collection Business Makes a Payment on the Loan

question 18

Multiple Choice

Helen's Home Collection business makes a payment on the loan. The payment of $1000 consists of $900 principal and $100 interest. The Cash account will be ____.

• A) reduced by $900
• B) reduced by $1000
• C) increased by $900
• D) increased by $100

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Definitions:

Algebraic Equation

A mathematical statement that shows the equality of two expressions, usually involving variables and constants, related by operations like addition, subtraction, multiplication, and division.

Sequential Method

The sequential method is an approach to allocating service department costs to production departments in a linear fashion, based on a predetermined order or sequence.

Step-Up Method

An allocation method used in cost accounting to allocate support department costs to other departments incrementally.

Inter-Support-Department Services

The exchange of support or administrative services between different departments within the same organization, often allocated as part of overhead costs.