On September 1,2018,Heartford Construction lends $50,000 to a customer with 10% interest.The note and interest are due in twelve months.The note receivable is recorded for $50,000 on September 1,but no other adjustments are made in 2018.At the end of 2018,which of the following is true?

Question

Quizplus · Accepted Answer

Since the interest for 2018 has not been recorded, revenues are understated because the interest revenue that has been earned during 2018 is not reflected in the financial statements. Interest revenue increases with the passage of time as the money is lent out, and recognizing this revenue is necessary to accurately reflect the company's financial performance.

On September 1,2018,Heartford Construction Lends $50,000 to a Customer with 10