An adjustment that must be made for the accrued interest on a note receivable is to:
A)debit Interest Expense and credit Interest Payable.
B)debit Interest Receivable and credit Interest Income.
C)debit Interest Receivable and credit Notes Receivable.
D)None of these answers are correct.

Question

Quizplus · Accepted Answer

The correct adjustment for accrued interest on a note receivable is to debit Interest Receivable and credit Interest Income. This recognizes the interest earned but not yet received, increasing assets (Interest Receivable) and increasing income (Interest Income).

An Adjustment That Must Be Made for the Accrued Interest