at the end of the accounting period, a company has accrued interest revenue that will not be received until…

at the end of the accounting period, a company has accrued interest revenue that will not be received until the next accounting period. the adjusting entry would include a:\n\na. debit to interest receivable.\nb. debit to interest expense.\nc. debit to interest payable\nd. debit to interest revenue.

at the end of the accounting period, a company has accrued interest revenue that will not be received until the next accounting period. the adjusting entry would include a:\n\na. debit to interest receivable.\nb. debit to interest expense.\nc. debit to interest payable\nd. debit to interest revenue.

Answer

Brief Explanations:

When interest revenue is accrued but not yet received, it means the company has earned the interest (revenue recognition) but has not received the cash. According to accounting principles, an asset (Interest Receivable) is created (debited) to recognize the amount owed to the company, and Interest Revenue (a revenue account, which is credited as revenues increase with credit entries) is recognized.

  • Option B: Debiting Interest Expense is incorrect as this is a revenue - related transaction, not an expense.
  • Option C: Interest Payable is a liability account. Since the company is the one to receive the interest (not pay it), this is wrong.
  • Option D: Debiting Interest Revenue would decrease the revenue, which is contrary to the revenue recognition principle as the revenue has been earned.

Answer:

A. debit to Interest Receivable.