The Entry to Collect Cash on Account Involves a

question 104

Multiple Choice

The entry to collect cash on account involves a

• A)debit to Cash and a credit to Accounts Payable.
• B)debit to Accounts Receivable and a credit to Cash.
• C)debit to Cash and a credit to Accounts Receivable.
• D)debit to Accounts Receivable and a credit to Accounts Payable.
• E)debit to Cash and a credit to Sales Revenue.

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Definitions:

Effective Rate

The total calculated interest on a loan or investment annually, including compounding, differing from the nominal interest rate.

Effective Annualized Rate

The interest rate that is annualized using compounding over a given period, providing a true reflection of the financial cost.

Simple Interest

Interest calculated on the principal portion of a loan or deposit, without compounding over time.

GICs

Guaranteed Investment Certificates, a type of Canadian investment that offers a guaranteed rate of return over a fixed period of time.