A Business Makes a Payment of $1,200 on a Note

question 56

Multiple Choice

A business makes a payment of $1,200 on a note payable, consisting of a $200 interest payment and a $1,000 principal payment. Which of the following journal entries would be recorded?

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Definitions:

Activity Cost Pools

A method in activity-based costing that aggregates all indirect costs associated with a particular activity, allowing for more precise allocation of overheads to products or services.

Organization-Sustaining Activities

Activities that are carried out regardless of which customers are served, which products are produced, how many batches are run, or how many units are made.

First-Stage Allocations

The process of assigning overhead costs to different departments or cost pools as a first step in allocating costs to individual products or services.

ABC System

Refers to Activity-Based Costing System, a method of assigning costs to products or services based on the resources they consume.