Jeff Company Issues a Promissory Note to David Company to Get

question 22

Multiple Choice

Jeff Company issues a promissory note to David Company to get extended time on an account payable.David records this transaction as follows:

• A)debit Accounts Receivable; credit Notes Receivable.
• B)debit Notes Receivable; credit Accounts Receivable.
• C)debit Notes Payable; credit Accounts Payable.
• D)debit Accounts Payable; credit Notes Payable.

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Definitions:

Retained Earnings

The portion of a business's profits not distributed to shareholders but reinvested in the business or held for future use.

Surplus Cash

Excess funds that a company retains over its necessary working capital and capital expenditure requirements, often available for investment or distribution.

Dividends

A portion of a company's earnings distributed to shareholders, often in the form of cash or additional stock.

Internal Revenue Code

The comprehensive set of tax laws in the United States, governed by the Internal Revenue Service (IRS), that dictates federal tax obligations.