Interest on a bank loan accrued but not paid at year-end is shown in the final accounts by: MCQ with Answer and Explanation

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Interest on a bank loan accrued but not paid at year-end is shown in the final accounts by:

A. Crediting P&L A/c, Showing as an Asset

B. Debiting P&L A/c, Adding to Bank Loan in Balance Sheet

C. Ignoring it until paid

D. Debiting Trading A/c, Deducting from Bank Loan

Answer: Option B

Solution (By JKExamLibrary)

Accrued interest is an expense for the year (Debit P&L) and an outstanding liability (Added to loan or shown separately in Balance Sheet).

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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