ABC Company Owes the Bank $40,000 on Their Mortgage

question 3

Multiple Choice

ABC Company owes the bank $40,000 on their mortgage. The bank charges them $300 a month in interest. At the end of the accounting period, ABC owes the bank three months of interest. The adjusting journal entry made by ABC Company will include:

• A) a credit to Interest Revenue for $900.
• B) a debit to Interest Payable for $300.
• C) a debit to Interest Expense for $900.
• D) a credit to Interest Receivable for $600.

---

Definitions:

Accommodation

A cognitive process described by Piaget in which existing mental schemas are modified or new schemas are created to incorporate new information.

Schema

A cognitive framework or concept that helps organize and interpret information in the mind.

Old Schema

Pre-existing mental structures or frameworks that help individuals organize and interpret information, based on past experiences and knowledge.

Developmental Processes

The series of changes and growth that occur over the course of a living organism's life.