in september of year 1, hansen company issued a note payable to borrow money from its bank. principal and…

in september of year 1, hansen company issued a note payable to borrow money from its bank. principal and interest on the note would come due in june year 2. interest expense on this note must be accrued at the end of year 1 for the period from issuance of the note to the last day of the accounting period. true or false

in september of year 1, hansen company issued a note payable to borrow money from its bank. principal and interest on the note would come due in june year 2. interest expense on this note must be accrued at the end of year 1 for the period from issuance of the note to the last day of the accounting period. true or false

Answer

Brief Explanations:

Under the accrual - basis accounting, expenses are recognized when they are incurred, not when cash is paid. The interest expense for the period from the issuance of the note in September Year 1 to the end of Year 1 needs to be accrued as it relates to Year 1 operations even though the principal and interest are due in June Year 2.

Answer:

True