Which of the following best describes the accrual of interest?
A)Assets and stockholders' equity decrease.
B)Assets and liabilities decrease.
C)Net income and expenses decrease.
D)Expenses and liabilities increase.

Question

Quizplus · Accepted Answer

The accrual of interest results in an increase in expenses and liabilities because the company has incurred an expense (interest) but has not yet paid for it. Therefore, the liability to pay the interest increases as well.

Which of the Following Best Describes the Accrual of Interest