Bed Debt When a company has earned interest in the current period but has not ye

Question

Bed Debt When a company has earned interest in the current period but has not yet recorded the what type of adjustment is the company required to make? Click the answer you think is right. No adjustment is necessary until the cash is collected. Make an adjusting entry at the end of the the next period to accrue interest earned. Make no adjusting entry at the end of the period because interest has not been earned yet. Make an adjusting entry at the end of the current period to accrue the interest earned Do you know the answer? Read about this I know it Think so Unsure No idea

Explanation / Answer

Answer:

Option 4 i.e. Make an adjusting entry at the end of the current period to accrue the interest earned.

As per Accrual Principle, the revenue and expenses for a year should be recorded in the year in which they are accrued/ earned.

The Interest earned in the year should be recorded in the same year in which it is earned. Therefore, Interest earned but yet not received should be recorded at the end of current year.

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