When calculating the interest on a note receivable 365 days instead of 360 days was used.This error would cause:
A)the period end assets to be overstated.
B)the period end liabilities to be understated.
C)the period's net income to be overstated.
D)the period's net income to be understated.

Question

Quizplus · Accepted Answer

Using 365 days instead of 360 days results in a lower interest amount, which would decrease interest income, thus understating the period's net income.

When Calculating the Interest on a Note Receivable 365 Days