The Matching Principle Requires That Interest Expense Not Be Accrued

question 142

True/False

The matching principle requires that interest expense not be accrued on a note payable until the note is paid, even if the end of an accounting period occurs between the signing of a note payable and its maturity date.

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Definitions:

Sale

The exchange of a good or service for money; a transaction between two parties where the buyer acquires ownership of the item.

Interest Revenue

Income earned from lending money or other types of investments that yield interest.

Investment In Bonds

The purchase of bonds issued by corporations, governments, or other entities as a means of earning interest income and potential price appreciation.

Comprehensive Income

All changes in stockholders’ equity during a period, except those resulting from dividends and stockholders’ investments.