The adjusting entry for accrued interest on a notes receivable includes:
A)a debit to Interest Expense; a credit to Interest Revenue.
B)a debit to Accrued Interest Receivable; a credit to Interest Revenue.
C)a debit to Interest Revenue; a credit to Accrued Interest Payable.
D)a debit to Accrued Interest Receivable; a credit to Interest Payable.

Question

Quizplus · Accepted Answer

The adjusting entry for accrued interest on a notes receivable involves recognizing interest revenue that has been earned but not yet received. The correct entry is a debit to Accrued Interest Receivable, as this represents the amount of interest earned but not yet received, and a credit to Interest Revenue, as this represents the revenue earned from the notes receivable. Therefore, option B is the correct answer.

The Adjusting Entry for Accrued Interest on a Notes Receivable