The Journal Entry to Record the Year End Accrual of Interest

question 41

Multiple Choice

The journal entry to record the year end accrual of interest expense on a noninterest-bearing note could include all of the following except:

• A)credit to Cash
• B)debit to Interest Expense
• C)credit to Interest Payable
• D)credit to Discount on Notes Payable

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Definitions:

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding production costs but including items like rent, utilities, and payroll.

Net Income

The total profit of a company after all expenses, including taxes, cost of goods sold, and operating expenses, have been deducted from total revenue.

Variable Costing

Another perspective: A costing methodology that treats only those costs that vary with production level as product costs, emphasizing the impact of fixed costs on profitability.

Special Order Decisions

Special order decisions involve determining whether a business should accept or decline a custom order that differs from normal sales, considering capacity and costing.