Which of the Following Correctly Describes the Accounting Treatment for Interest

question 87

Multiple Choice

Which of the following correctly describes the accounting treatment for interest payable?

• A) It is shown on the balance sheet as a current liability.
• B) It is shown on the income statement as an operating expense.
• C) It is shown on the balance sheet as a current asset.
• D) It is shown on the balance sheet as a long-term liability.

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Definitions:

Equity

Refers to the ownership interest in a corporation in the form of common or preferred stock; it represents the owners' share in the company's assets.

Fairness

A subjective concept referring to equal and impartial treatment, decisions, and actions in context with ethical, societal, or personal standards and norms.

Normative Economics

An approach to economics that makes judgments about what the economy should be like or what particular policy actions should be recommended.

Behavior

The actions or reactions of an individual, group, or system in response to external or internal stimuli.