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

Accrued interest on a short-term note is recorded by debiting Interest Expense and crediting Interest Payable. This is because Interest Expense is an income statement account and is used to record the cost of borrowing money. Interest Payable is a balance sheet account and represents the amount of interest that has been incurred but not yet paid.

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