An Adjusting Entry Made to Record Accrued Interest on a Note

question 159

Multiple Choice

An adjusting entry made to record accrued interest on a note payable due next year consists of

• A) Cash - Debit; Interest Expense - Credit.
• B) Interest Receivable - Debit; Interest Income - Credit.
• C) Interest Payable - Debit; Interest Expense - Credit.
• D) Interest Expense - Debit; Interest Payable - Credit.

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Definitions:

After-tax Cash Inflow

The net amount of cash generated from an investment after deducting all applicable taxes.

Income Tax Rate

The percentage of an individual's or corporation's income that is paid to the government as tax.

Net Profit

The financial gain remaining after subtracting all operating expenses, interest, taxes, and any other charges from total revenue.

Income Tax Rate

The rate at which an individual or business's income is taxed by the government, similar in essence to Tax Rate but specifically applied to income.