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Interest is usually associated withGroup of answer choicesbad debts.doubtful accounts.notes receivable.accounts receivable.

Question

Interest is usually associated with

  • bad debts.
  • doubtful accounts.
  • notes receivable.
  • accounts receivable.
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Solution

Interest is usually associated with notes receivable.

Here's why:

  1. Bad debts: These are amounts that are uncollectible. They are not associated with interest because they represent the money that the business will never receive.

  2. Doubtful accounts: These are the amounts that the business thinks it may not collect. Again, these are not associated with interest because they represent potential losses.

  3. Notes receivable: These are written promises for amounts the business will receive. They are typically used for longer-term receivables and they usually do involve interest. The business will receive the amount of the note plus interest.

  4. Accounts receivable: These are amounts the business expects to receive in the short term. They do not usually involve interest.

So, out of these options, interest is usually associated with notes receivable.

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