When a Customer's NSF Check Is Returned to a Business

question 108

Multiple Choice

When a customer's NSF check is returned to a business with its bank statement, the business should make a journal entry increasing

• A) Cash.
• B) Accounts Receivable.
• C) Accounts Payable.
• D) Allowance for Doubtful Accounts.

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Definitions:

Put Option

A financial contract giving the holder the right to sell a specified amount of an underlying asset at a set price before a certain date.

GM Stock

Equity shares issued by General Motors Company, a major automotive manufacturer based in the United States.

Strike Price

The predetermined price at which the holder of a options contract can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Call Contract

An agreement that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a predetermined price within a specific time frame.