Three months before year-end,Skyway Company signed a $100,000,10%,8-month note.Principal and interest will be paid at maturity.No interest should be accrued at year-end because the company has no obligation to pay the interest until the note matures.

Question

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Interest should be accrued at year-end because it represents an expense incurred during the period, even if it is not paid until the note matures.

Three Months Before Year-End,Skyway Company Signed a $100,000,10%,8-Month Note