When a business records accrued interest expense on a note payable ________.
A) Interest Expense is credited
B) Note Payable is credited
C) Cash is debited
D) Interest Payable is credited

Question

Quizplus · Accepted Answer

Accrued interest expense on a note payable is a liability and should be recorded by crediting Interest Payable. This entry reflects the obligation of the company to pay the interest on the note. No cash is involved in this transaction, and neither the Note Payable nor Interest Expense accounts are affected because they were already recorded when the note was issued.

When a Business Records Accrued Interest Expense on a Note