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:

Trade Surplus

Occurs when a country's exports exceed its imports during a specific time period, indicating a positive balance of trade.

Bilateral Trade Agreement

An agreement between two countries that lowers tariffs and trade barriers on most goods and services traded between them.

Exports

Goods or services produced in one country and sold to buyers in another, contributing to a country's economy by bringing in revenues.

Mercantilism

An economic theory and practice dominant in Europe from the 16th to the 18th century, focusing on accumulating wealth through trade and having a positive balance of trade.