Question

when a business makes an antry with a debit to interest receivable. the usual credit entry...

when a business makes an antry with a debit to interest receivable. the usual credit entry will be made to: a. interest revenue b.cash c. accounts receivable d. retained earnings

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Answer #1

Answer:

Correct answer is:

a. interest revenue

Explanation:

When Interest revenue is accrued usual entry passed is as follows:

As such option 'a. interest revenue' is correct.

An entry with credit to 'cash' with a debit to 'Interest Receivable' is not usual

Accounts receivable is normally credited when Cash is received (debit to Cash) or when it is being written off ( debit to Allowances for Doubtful debt) . As such option c is incorrect.

'Retained earnings' is normally credited as part closing entries at period end when 'net profit net of dividends paid' is taken to 'Retained Earnings". As such option d is incorrect.

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