The journal entry to record accrued interest on a short-term note payable includes a debit to:
A)Interest Payable and a credit to Cash.
B)Interest Expense and a credit to Cash.
C)Interest Expense and a credit to Interest Payable.
D)Interest Payable and a credit to Notes Payable.

Question

Quizplus · Accepted Answer

Accrued interest on a short-term note payable is recorded as an expense in the period in which it is incurred. Therefore, the journal entry should include a debit to Interest Expense and a credit to Interest Payable. The other options do not correctly record the transaction.

The Journal Entry to Record Accrued Interest on a Short-Term