Adv. Accounting - Ch. 10 Review

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Most companies use a 365 day year to calculate interest on notes receivable, even in a leap year.

After closing entries have been posted, the balance in Interest Receivable will be zero.

If a customer signs a note allowing 90 days for payment and pays no cash up front, the transaction is recorded in the cash receipts journal.

Matching Expenses with Revenue is applied when special accounting procedures are implemented so the correct amt. of revenue earned in the period is recognized in the financials.

Additional interest is charged on a dishonored note receivable from the maturity date of the note to the date payment is received.

Adequate Disclosure is being applied when businesses report accurate & up-to-date info about notes receivable & accrued revenue on their financial statements at the end of a period

The reversing entry for unearned revenue initially recorded as a revenue is a debit to the liability account and a credit to the revenue account.

Historical Cost is being applied when a company includes in its Notes Receivable balance in the financial statements only the amount of notes receivable they expect to collect.