If the company had a loan outstanding, which of the following would be used to record accrued interest at the end of the accounting period?
A)Increase interest expense, decrease cash
B)Increase interest expense, increase interest payable
C)Decrease interest payable, increase interest income
D)Decrease interest payable, decrease cash

Question

Quizplus · Accepted Answer

Accrued interest on a loan is recorded by increasing the interest expense and increasing the interest payable account, since the company owes interest to the lender but has not yet paid it. Choices A, C, and D are not correct because they either decrease the interest payable account or involve cash, which is not related to accrued interest.

If the Company Had a Loan Outstanding, Which of the Following