Creol Soaps Requires Its Customers to Pay for Their Orders

question 12

Multiple Choice

Creol Soaps requires its customers to pay for their orders six weeks before shipping the goods.How should the payments be initially recorded by Creol?

• A)Debit bank,credit a liability account
• B)Debit bank,credit an expense account
• C)Debit bank,credit an asset account
• D)Debit bank,credit an income account

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Definitions:

Interest Payment

The amount paid by a borrower to a lender for the use of borrowed money, usually expressed as a percentage of the principal.

Note Payable

A liability representing a written promise to pay a specified amount of money at a future date, often including interest payments.

Maturity

The date on which a financial instrument, such as a bond or loan, becomes due and the principal is to be repaid.

Notes Payable

A written agreement where a borrower agrees to pay back a lender a specific amount of money, often with interest, by a certain date, recorded as a liability in financial statements.