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Accounts Receivable MCQs

Which of the following is not true about interest on Receivables?

Interest receivable is calculated by using the formula Interest= Principal x Interest Rate x Time.

Interest receivable does not have to be recognized if interest is to be collected in the next year

We need to recognize interest receivable to satisfy the matching principle.

Interest receivable is interest earned but not collected.

Answer

Correct Answer: Interest receivable does not have to be recognized if interest is to be collected in the next year

Explanation:

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