When the Amount of Interest Receivable Decreases During an Accounting

question 2

Multiple Choice

When the amount of interest receivable decreases during an accounting period:

• A)Accrual-basis revenues exceed cash collections from borrowers.
• B)Accrual-basis net income exceeds cash-basis net income.
• C)Accrual-basis revenues are less than cash collections from borrowers.
• D)Accrual-basis expenses are less than cash payments to borrowers.

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Definitions:

Withholding Allowances

Claims made on a W-4 form that determine the amount of an employee’s income not subject to federal income tax withholding.

Percentage Method

A way to calculate taxes or other financial figures by applying a specific percentage rate to a base amount.

Federal Income Tax

An annual financial obligation enforced by the IRS on earnings of persons, businesses, trusts, and other legal entities.

FICA Taxes

Taxes collected under the Federal Insurance Contributions Act, funding Social Security and Medicare, deducted from employees' paychecks and matched by employers.