Which of the Following Occurs When a Company Records Accrued

question 99

Multiple Choice

Which of the following occurs when a company records accrued interest expense on a note payable?

• A)Interest Expense is credited.
• B)Note Payable is credited.
• C)Cash is debited.
• D)Interest Payable is credited.

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Definitions:

Cumulative Preferred Stock

A type of preferred stock where missed dividend payments are accumulated and must be paid before any dividends can be issued on other stock classes.

Liability

A financial obligation or debt owed by a company to another entity, to be settled through the transfer of assets or services.

Date of Declaration

The date on which a company announces its intention to pay a dividend or issue a corporate action to its shareholders.

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash or additional shares.