Author Question: Slumbers, Inc borrows 3,000 at 12 from a bank on September 1, 2012 and agrees to pay the interest ... (Read 73 times)

Zoey63294 · **on:** Jul 5, 2018

Slumbers, Inc borrows 3,000 at 12 from a bank on September 1, 2012 and agrees to pay the interest and principal in two years.

What is the effect on the accounting equation of the adjusting entry to record interest for the year ended December 31, 2012?
A) Assets will increase by 3,000.
B) Liabilities will decrease by 120.
C) Shareholders' equity will decrease by 120.
D) Cash will decrease by 120.

Question 2

Payments from the petty cash fund should not be made without obtaining some sort of receipt in return.
a. True
b. False
Indicate whether the statement is true or false