The accrual of interest on a note payable will:
A)Reduce total liabilities.
B)Increase total liabilities.
C)Have no effect upon total liabilities.
D)Will have no effect upon the income statement but will affect the balance sheet.

Question

Quizplus · Accepted Answer

Accrual of interest on a note payable represents an obligation of the company to make a future payment to the lender. This will increase the total liabilities on the balance sheet as it is a current liability.

The Accrual of Interest on a Note Payable Will