The journal entry to record accrued interest on a short-term note payable must include a debit to:
A)Interest Payable and a credit to Cash.
B)Interest Expense and a credit to Cash.
C)Interest Expense and a credit to Interest Payable.
D)Interest Payable and a credit to Notes Payable.

Question

Quizplus · Accepted Answer

When recording accrued interest on a short-term note payable, the account to be debited is Interest Expense and the account to be credited is Interest Payable. This is because the company has incurred an expense (interest) but has not yet paid it. Therefore, Interest Expense is debited to recognize the expense, while Interest Payable is credited to acknowledge the obligation to pay it. The other options are incorrect because they do not properly reflect the accounting treatment for recognizing accrued interest on a short-term note payable.

The Journal Entry to Record Accrued Interest on a Short-Term