Interest That Has Accrued During the Accounting Period on a Note

question 127

Multiple Choice

Interest that has accrued during the accounting period on a note payable to the bank calls for an adjusting entry consisting of:

• A) A debit to Interest Expense and a credit to Cash.
• B) A debit to Notes Payable and a credit to Interest Payable.
• C) A debit to an asset and a credit to a liability.
• D) A debit to Interest Expense and a credit to Interest Payable.

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Definitions:

Cooperative

Working or acting together willingly for a common purpose or benefit.

Onlooker

An individual who observes events or other people but does not participate directly in the activities.

Constructive

Pertaining to constructs or building up, often used to describe positive efforts or contributions towards development or understanding.

Formal

Formal refers to activities, events, or situations that are structured, official, or follow established norms and procedures rather than being casual or relaxed.