Assuming the Maker of the Note Defaults on May 1

question 129

Multiple Choice

Assuming the maker of the note defaults on May 1, 2011, Salem will record on this date:

• A) An account receivable of $900,000 from the maker of the note.
• B) An account receivable in the amount of $900,000, as well as interest expense of $27,000.
• C) An account receivable in the amount of $927,000, as well as interest revenue of $18,000.
• D) An account receivable in the amount of $900,000, as well as interest revenue of $18,000.

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Definitions:

Reduced Overhead

The action or effect of decreasing indirect costs associated with running a business, such as administrative expenses, utilities, and rent.

Operating Efficiency

Refers to the ability of a business to deliver services or products in a cost-effective manner while maintaining high quality.

Crude Oil Prices

The cost per barrel of crude oil on the global markets, influencing energy prices and economic indicators.

OPEC

The Organization of the Petroleum Exporting Countries (OPEC) is an international cartel that aims to manage the supply of oil in an effort to set the price of oil on the world market.