The matching principle requires that interest expense not be accrued on a note payable until the note is paid, even if the end of an accounting period occurs between the signing of a note payable and its maturity date.

Question

Quizplus · Accepted Answer

The matching principle requires expenses to be recorded in the period in which they help generate revenues, regardless of when the cash is paid. Therefore, interest expense on a note payable should be accrued over the period the note is outstanding, not just when the note is paid.

The Matching Principle Requires That Interest Expense Not Be Accrued