To Record the Purchase of Assets on Account Under the Modified

question 44

Multiple Choice

To record the purchase of assets on account under the modified cash accounting method,

• A) no entry is required.
• B) debit the asset and credit Accounts Payable.
• C) debit the asset and credit Cash.
• D) debit Accounts Receivable and credit Accounts Payable.

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Definitions:

Enforceable Security Interest

A legal claim or lien on collateral that can be secured through judicial action if necessary.

Written Security Agreement

A legally binding document that creates a security interest, giving the lender a right to seize collateral if the borrower fails to meet the obligations of the loan.

Collateral

an asset or property that a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid.

Buyer

A person or organization that acquires goods or services from a seller in exchange for money.