Question

Wisdom Co. has a note payable to its bank. An adjustment is likely to be required on Wisdom's books at the end of every month that the loan is outstanding to record the:

Answer 1

Wisdom Co. has a note payable to its bank. An adjustment is likely to be required on Wisdom's books at the end of every month that the loan is outstanding to record the: accrued interest expense for the month.

What is Accrued interest expense?

Accrued interest expense will appear on the income statement but not on the statement of cash flows.

Under the accrual method of accounting, the account 'Interest Expense' shows the interest that occurred during the period of time covered by the financial statement.

When that interest is past its due date for payment, it should be recorded as 'Interest Payable'.

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