Xi Co Has a Bills Receivable for $3089 Given in Settlement

question 39

Multiple Choice

Xi Co has a bills receivable for $3089 given in settlement of a debt. The value of the bill is made up of principal of $3000 and interest of $89. When the note is paid, at the end of its 90 day term, Xi Co's bank is debited with $ _____ and bills receivable is credited with $3089.

• A) $3000
• B) $3089
• C) $2911
• D) $3200

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Definitions:

U.S.GAAP

The set of accounting principles and standards used in the United States to govern the preparation of financial statements by publicly traded companies, focusing on transparency, consistency, and comparability.

Ascending Order of Liquidity

A financial classification method where assets are listed from the least liquid to the most liquid, typically starting with long-term investments and ending with cash.

Inventories

Items held by a company for the purpose of sale in the ordinary course of business, work in process, or materials to be consumed in the production process.

Historical Cost

The original monetary value of an asset or investment at the time it was acquired or made.