Mac,Inc.purchased a truck on October 1,2011 in exchange for a 12-month,9%,$100,000 note.What effect does the October 31,2011 adjusting entry for interest have on the company's total liabilities?

Question

Quizplus · Accepted Answer

The adjusting entry for interest will increase the company's total liabilities because it represents the portion of the note that has accrued as interest expense but has not yet been paid.

Mac,Incpurchased a Truck on October 1,2011 in Exchange for a 12-Month,9%,$100,000