What Would Be the Adjusting Entry for a Note Payable

question 147

Multiple Choice

What would be the adjusting entry for a note payable whose interest is not included in the face amount of the note?

• A)Debit Interest Receivable and credit Interest Income.
• B)Debit Interest Expense and credit Cash.
• C)Debit Interest Expense and credit Interest Payable.
• D)Debit Cash and credit Notes Payable.

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Definitions:

Return On Total Assets

A financial ratio that measures the profitability of a company relative to its total assets, indicating how effectively a company is using its assets to generate earnings.

Long-Term Debt

Borrowings and financial obligations that are due for repayment in a period exceeding one year.

Return On Equity

A financial ratio that measures the profitability of a business in the relation to the equity, indicating how effectively shareholder equity is being utilized.

Price-Earnings Ratio

A financial ratio that measures a company's current share price relative to its per-share earnings.