Which of the Following Journal Entries Is Correct When a Company

question 42

Multiple Choice

Which of the following journal entries is correct when a company has incurred interest expense but has not yet paid the interest?

• A) Interest expense
• \( \quad \)\( \quad \)Operating income
• B) Interest expense
• \( \quad \)\( \quad \)Interest payable
• C) Interest payable
• \( \quad \)\( \quad \)Interest expense
• D) Retained earnings
• \( \quad \)\( \quad \)Interest expense

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Definitions:

Value-Based Pricing

Pricing strategy where the selling price is determined by estimating the product's or service's value to the customer rather than its cost of production or market competition.

Preventive Maintenance

Routine maintenance and inspections carried out to prevent potential problems or failures before they occur.

Useful Life

The estimated period of time over which an asset is expected to be usable by the entity, after which it may no longer be economically beneficial to keep.

Economic Value

The measure of the benefit obtained from a good or service, often compared to potential alternatives.