If on December 31, 2012, Interest Expense of $600 Is $\begin{array} { c c } \text { Interest Expense } & 600 \\\text { Cash } & 600\end{array}$

question 35

Multiple Choice

If on December 31, 2012, interest expense of $600 is owed on a bank note that will NOT be paid until July 2013, what is the appropriate adjusting entry at the end of 2012?

• A)
• \(\begin{array} { c c }
• \text { Interest Expense } & 600 \\
• \text { Cash } & 600
• \end{array}\)
• B)
• \(\begin{array} { c r }
• \text { Interest Expense } & 600 \\
• \text { Interest Payable } & 600
• \end{array}\)
• C)
• \(\begin{array}{lll}
• \text { Cash } & 600 & \\
• \text { Interest Expense } & & 600
• \end{array}\)
• D)
• \(\begin{array} { l r l }
• \text { Interest Payable } & 600 \\
• \text { Interest Expense } & 600
• \end{array}\)

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Definitions:

Probability Distributions

Mathematical representations that outline every potential value and their probabilities for a random variable across a specified interval.

Risk

The potential that an investment's actual return will differ from the expected return, encompassing the possibility of losing some or all of the original investment.

Real Option

A real option is a financial concept that represents the choice to undertake certain business initiatives, such as expanding, deferring, or abandoning a project, based on future opportunities.

Expected NPV

The anticipated Net Present Value of an investment, calculated using expected cash flows and discounting them to their present value.