Failure to record accrued interest expense would result in which of the following?
A)Assets being overstated
B)Assets being understated
C)Liabilities being overstated
D)Liabilities being understated

Question

Quizplus · Accepted Answer

Accrued interest is an expense that has been incurred but not yet paid or recorded. If the accrued interest expense is not recorded, it would result in the understatement of liabilities because the interest payable to lenders or bondholders is a liability for the company. As a result, the financial statements would be misleading, and users would not have an accurate representation of the company's financial position.

Failure to Record Accrued Interest Expense Would Result in Which