Question

Interest on a Note Payable is most appropriately accrued:_____________
A. when the note is signed
B. as of the end of each accounting period during which the note is a liability.
C. when principal payments on the note are made.
D. when the interest is paid.

Answer 1

Answer: Interest on a Note Payable is most appropriately accrued: "B. as of the end of each accounting period during which the note is a liability.".

Explanation: As long as the Note Payable remains a liability and has not yet reached its due date, according to the accrual principle, at the end of each accounting period the accrued interest must be recognized, and when the Note payable reaches its expiration it must remain with balance 0 the interest not accrued account.