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Q7(2)PSB

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Financial & Managerial Accounting
Found in: Page 160

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Short Answer

In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank.

A. Current assets E. Current liabilities

B. Long-term investments F. Long-term liabilities

C. Plant assets G. Equity

D. Intangible assets

2. Interest receivable

The correct answer is A, Current assets.

See the step by step solution

Step by Step Solution

Definition of Interest

The extra amount paid or received with the principal amount as a reward for the principal invested or expense for principal borrowed is known as the principal's interest.

Reason for choice

The interest is generally receivable within one year when it becomes due. It increases the future benefits, so it should be disclosed under the asset section in the current subhead assets.

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