The adjusting entry to accrue interest earned would include a:
A)credit to interest payable
B)debit to interest receivable
C)debit to cash
D)credit to interest expense

Question

Quizplus · Accepted Answer

The adjusting entry to accrue interest earned would involve recognizing the interest revenue that has been earned but not yet received or recorded. This would require a debit to interest receivable, which represents the amount of interest owed to the company, and a credit to interest revenue. Therefore, the best choice is B, a debit to interest receivable. The other options are not appropriate for accruing interest earned. A credit to interest payable would be used to record interest owed by the company to others, while a debit to cash would be used to record a payment of interest received. A credit to interest expense would be used to record interest incurred by the company on borrowed funds.

The Adjusting Entry to Accrue Interest Earned Would Include A