At the end of the accounting period,3 months' interest is owing to the company on a term deposit with the bank.
A) A liability increases and another liability decreases.
B) An asset decreases and a liability decreases.
C) An asset increases and revenue increases.
D) An asset increases and another asset decreases.

Question

Quizplus · Accepted Answer

Interest owing on a term deposit is accrued interest, which is considered as earned revenue not yet received. Therefore, it increases an asset (interest receivable) and increases revenue.

At the End of the Accounting Period,3 Months' Interest Is