When a company has earned interest in the current period but has not yet recorded the interest,what type of adjustment is the company required to make?
A)Make an adjusting entry at the end of the current period to accrue the interest earned.
B)Make no adjusting entry at the end of the period because interest has not been earned yet.
C)Make an adjusting entry at the end of the next period to accrue interest earned.
D)No adjustment is necessary until the cash is collected.

Question

Quizplus · Accepted Answer

An adjusting entry must be recorded at the end of the accounting period to accrue the interest earned includes a debit to Interest Receivable (to increase that asset account).and a credit to Interest Revenue (to increase that revenue account).

When a Company Has Earned Interest in the Current Period