Question

Which of the following statements about the recording of interest on notes receivable is correct?

A) Interest on notes receivable is recorded as revenue only when the cash is received.

B) When a company makes an interest payment on a note, the payment is debited to Interest Receivable.

C) Interest on notes receivable is recognized when it is earned, which is not necessarily when the interest is received in cash.

D) Interest earned but not yet received must be recorded in an adjusting entry which includes a debit to Interest Revenue.

Answer

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