Accrued interest on a short-term note payable is recorded by:
A) debiting Interest Expense and crediting Interest Payable
B) debiting Cash and crediting Interest Payable
C) debiting Interest Payable and crediting Cash
D) debiting Interest Payable and crediting Interest Expense

Question

Quizplus · Accepted Answer

Accrued interest on a short-term note payable is recognized as an expense and a liability. Therefore, the appropriate accounting entry would be to debit Interest Expense to recognize the expense and credit Interest Payable to record the liability. Choice A correctly reflects this accounting treatment. The other options do not recognize the liability and hence are incorrect.

Accrued Interest on a Short-Term Note Payable Is Recorded By