21-2

The adjusting entry for accrued interest expense is a. debit Interest Expense; credit Interest Payable b. debit Interest Income; credit Income Summary c. debit Income Summary; credit Interest Expense d. debit Interest Income; credit Interest Receivable

a. debit Interest Expense; credit Interest Payable

Expenses incurred in one fiscal period but not paid until a later fiscal period

accrued expenses

Interest incurred but not yet paid

accrued interest expense

Accrued expenses are recorded by an adjusting entry at the beginning of the fiscal period.

False

Reversing entries are made on the last day of the fiscal period.

False

The adjuting entry for accrued interest expense increases the balance in the liability account Accounts Payable.

False

Accounting procedures require that revenue and expenses be recorded in the accounting period in which revenue is earned and expenses are incurred.

True

An Interest Payable credit balance is accrued interest expense incurred in the current year but to be paid in the next year.

True

At the end of a fiscal period, the Interest Expense balance after adjustments shows the amount of interest expense that has been incurred in that fiscal period.

True

Interest incurred but not yet paid is accrued interest expense.

True

The reversing entry for accrued interest expense results in a debit entry to Interest Payable.

True

The closing entry for interest expense is a. debit Interest Expense; credit Interest Payable b. debit Interest Expense; credit Interest Expense c. debit Income Summary; credit Interest Expense d. debit Interest Expense; credit Income Summary

c. debit Income Summary; credit Interest Expense

The reversing entry for accrued interest expense is a. debit Interest Expense; credit Interest Payable b. debit Interest Expense; credit Income Summary c. debit Interest Payable; credit Interest Expense d. debit Income Summary; credit Interest Expense

c. debit Interest Payable; credit Interest Expense

An adjusting entry normally is reversed if the adjusting entry creates a balance in a. an expense and asset account b. a revenue or expense account c. a revenue and liability account d. an asset or liability account

d. an asset or liability account