Three months before its year end,a company signed a $250,000,12%,eight-month note.Principal and interest will be paid at maturity.No interest should be accrued at year end because the company has no obligation to pay the interest until the note matures.

Question

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Interest should be accrued at year end for the period the note has been outstanding, even if it has not yet matured, to reflect the expense incurred during the period and the liability for interest payable.

Three Months Before Its Year End,a Company Signed a $250,000,12%,eight-Month