Accompanying the Bank Statement Was a Credit Memo for a Short-Term

question 148

Multiple Choice

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the customer. What entry is required in the company's accounts?

• A) debit Notes Receivable; credit Cash
• B) debit Cash; credit Miscellaneous Income
• C) debit Cash; credit Notes Receivable and Interest Revenue
• D) debit Accounts Receivable; credit Cash

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Definitions:

Unit Variable Cost

The cost that varies with each unit produced, including direct materials and labor, but does not include fixed costs.

Property Tax Rates

The percentage of a property's assessed value that is charged as tax by local governments to fund public expenses.

Break-even Point

The sales level at which total revenues equate to total costs, resulting in no profit or loss, indicating the minimum sales necessary to cover all expenses.

Fixed Costs

Expenses that do not change with the level of production or sales activity, such as rent, salaries, and insurance premiums.