If Company A has an accrual of interest to be received on a note receivable,then the company should debit
A)Interest expense.
B)Accrued interest payable.
C)Accrued interest receivable.
D)Interest revenue.
E)Cash.

Question

Quizplus · Accepted Answer

An accrual of interest to be received on a note receivable means that the company is owed interest but has not yet received it. Therefore, the company should debit Accrued Interest Receivable to recognize the amount it is owed. Option A (Interest Expense) is incorrect because this account is used to record interest the company owes to others, not interest that is owed to the company. Option B (Accrued Interest Payable) is incorrect because it would be used to record interest that the company owes to others, not interest owed to the company. Option D (Interest Revenue) is incorrect because it would be used to record interest earned on investments, not interest earned on a note receivable. Option E (Cash) is incorrect because the company has not yet received the interest in cash.

If Company a Has an Accrual of Interest to Be