On March 1,2012,Forest Co.borrowed cash and signed a 36-month,interest-bearing note on which both the principal and interest are payable on February 28,2015.At December 31,2014,the liability for accrued interest should be
A) 10 months' interest.
B) 22 months' interest.
C) 34 months' interest.
D) 36 months' interest.

Question

Quizplus · Accepted Answer

The liability for accrued interest at December 31, 2014, would be for 34 months. This is because the note was signed on March 1, 2012, and interest would start accruing from that date until December 31, 2014, which is a period of 34 months.