In September of 2013, Houston Company issued a note payable to borrow money from its bank. Principal and interest on the note would come due in June 2014. The matching principle requires that interest expense on this note be accrued at the end of 2013 for the period from issuance of the note to the last day of the accounting period.

Question

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Because the money borrowed helps Houston to generate revenue in 2013, it is necessary for Houston to recognize the expense (interest) related to that borrowed money in 2013.

In September of 2013, Houston Company Issued a Note Payable