If a Department Store Fails to Make the Entry to Accrue

question 38

Multiple Choice

If a department store fails to make the entry to accrue the finance charges due from customers

• A) accounts receivable will be overstated.
• B) interest revenue will be understated.
• C) interest expense will be overstated.
• D) interest expense will be understated.

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Definitions:

Profit

The financial gain achieved when the amount earned from selling goods or services exceeds the costs associated with production or procurement.

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The technique used by firms to pinpoint the price and amount of production that results in the largest profit.