If a retailer assesses a finance charge on the amount owed by a customer, Accounts Receivable is debited for the amount of the interest.

Question

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When a retailer assesses a finance charge on the amount owed by a customer, it means the customer owes additional interest on the outstanding balance. This interest amount is considered revenue for the retailer and is recorded in the Accounts Receivable account as a debit.

If a Retailer Assesses a Finance Charge on the Amount