Interest Earned on the Cash Balance in the Bank Is

question 34

Multiple Choice

Interest earned on the cash balance in the bank is recorded by the bank as:

• A)An increase in the bank's asset account.
• B)A decrease in the bank's asset account.
• C)A decrease in the depositor's bank account.
• D)An increase in the depositor's bank account.
• E)An increase in the bank's expense account.

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Definitions:

Order Cycles

The process or sequence of events from placing an order to receiving goods, often part of inventory management strategies.

Carrying Cost

The total cost of holding inventory, including storage, maintenance, and insurance.

Ordering Cost

The expenses incurred in placing and processing orders to suppliers.

EOQ Model

Economic Order Quantity Model, an inventory management formula that determines the optimal order size to minimize the sum of ordering, carrying, and stockout costs.