In an audit test of recorded interest expense and accrued interest, the auditor was able to detect that the recorded interest expense was higher than the calculations showed. This may indicate:
A)a failure to accrue interest occurred.
B)interest payments are in default.
C)interest payments were charged to another account.
D)interest was paid on an unknown debt or unrecorded liability.

Question

Quizplus · Accepted Answer

When the recorded interest expense is higher than the calculated amount, it suggests that there might be interest being paid on a debt or liability that has not been properly recorded in the books. This could be an unknown debt or an unrecorded liability, leading to the discrepancy in interest expense.

In an Audit Test of Recorded Interest Expense and Accrued