An adjusting entry made to record accrued interest on a note payable involves a credit to
A)interest expense.
B)accrued interest payable.
C)interest revenue.
D)accrued interest receivable.
E)cash.

Question

Quizplus · Accepted Answer

When making an adjusting entry to record accrued interest on a note payable, we need to recognize that we owe interest to the holder of the note, even if we haven't yet paid it. This means we need to record a liability for the accrued interest that we owe, which is credited to accrued interest payable. The corresponding debit entry would be to interest expense, which reflects the cost of borrowing money. Therefore, the correct answer is B.

An Adjusting Entry Made to Record Accrued Interest on a Note