Asked by Durgesh Kumar on Jul 06, 2024
Verified
If a department store fails to make the entry to accrue the finance charges due from customers
A) accounts receivable will be overstated.
B) interest revenue will be understated.
C) interest expense will be overstated.
D) interest expense will be understated.
Accrue Finance Charges
The process of adding interest or finance charges to the amount owed by a borrower over time, based on the agreement's terms.
Interest Revenue
Income earned by a company from lending money or through investment in debt securities.
- Comprehend the role and termination method of the Allowance for Doubtful Accounts.
- Analyze the economic effects of utilizing national credit cards on retail sectors.
Verified Answer
LZ
lizzy zarrelloJul 08, 2024
Final Answer :
B
Explanation :
Failing to accrue finance charges due from customers results in not recognizing the revenue earned from these charges, thus understating interest revenue.
Learning Objectives
- Comprehend the role and termination method of the Allowance for Doubtful Accounts.
- Analyze the economic effects of utilizing national credit cards on retail sectors.