If a customer owes interest on accounts receivable, Interest Receivable is debited and Accounts Receivable is credited.

Name: If a customer owes interest on accounts receivable, Interest Receivable is debited and Accounts Receivable is credited.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Interest Receivable is debited because the company has earned interest on the accounts receivable, which is an asset. Accounts Receivable is not credited because the customer still owes the money, so the balance in Accounts Receivable remains the same.

If a Customer Owes Interest on Accounts Receivable, Interest Receivable