An Example of an Adjusting Entry for an Accrued Expense

question 13

Multiple Choice

An example of an adjusting entry for an accrued expense item using the QBO journal is:

• A) \[\begin{array} { l c c }
• &\text { Debit } & \text { Credit } \\
• \text { Interest payable } &\$ 1,000\\
• \text { Interest expense } & &\$ 1,000 & \\
• \end{array}\]
• B) \[\begin{array} { l c c }
• &\text { Debit } & \text { Credit } \\
• \text { Interest expense } &\$ 1,000\\
• \text { Interest payable } & &\$ 1,000 & \\
• \end{array}\]
• C) \[\begin{array} { l c c }
• &\text { Debit } & \text { Credit } \\
• \text { Interest receivable } &\$ 1,000\\
• \text { Interest revenue } & &\$ 1,000 & \\
• \end{array}\]
• D) \[\begin{array} { l c c }
• &\text { Debit } & \text { Credit } \\
• \text { Interest revenue } &\$ 1,000\\
• \text { Interest receivable } & &\$ 1,000 & \\
• \end{array}\]

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Definitions:

Debt to Assets Ratio

A financial ratio that measures the percentage of a company's assets that are financed by debt, used to gauge a company's financial leverage.

Total Assets

The aggregate of all resources owned by a company, valued in monetary terms.

Creditors

Individuals or institutions to which money is owed by a person or entity.

Profit Margin

Measures the percentage of each dollar of sales that results in net income; computed by dividing net income by net sales.