The Entry to Reverse the Adjustment for Accrued Interest Income

question 83

Multiple Choice

The entry to reverse the adjustment for accrued interest income consists of a debit to

• A)Interest Income and a credit to Income Summary.
• B)Interest Income and a credit to Interest Receivable.
• C)Interest Receivable and a credit to Interest Income.
• D)Interest Income and a credit to Interest Expense.

---

Definitions:

Deferred Tax Liability

A tax obligation due in the future for income that has been recognized in the financial statements before it is taxable by tax authorities.

Tax Depreciation

The depreciation expense deducted for tax purposes, allowing taxpayers to recover the cost of a property or asset used in a trade or business for income-producing purposes.

Accounting Depreciation

Represents the systematic allocation of the depreciable amount of an asset over its useful life, reflecting the wear and tear, obsolescence, or other declines in value as an expense in the income statement.

Company Tax Rate

The rate at which a corporation's income is taxed by the government.