What effect does the adjusting entry for interest earned but yet not received have on the accounting equation?
A)It results in an increase in assets and stockholders' equity.
B)It results in a decrease in assets and stockholders' equity.
C)It results in an increase in assets and liabilities.
D)It results in an increase in assets and decrease in stockholders' equity.

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 that entry is made,assets will increase and net income will also increase.As a result,stockholders' equity will also increase.

What Effect Does the Adjusting Entry for Interest Earned but Yet