Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 31 - No. 45)
What is the impact on the financial statements when a company accrues interest expense?
Assets increase, liabilities increase.
Assets decrease, liabilities increase.
Expenses increase, liabilities increase.
Expenses decrease, liabilities decrease.
Explanation
Accruing interest increases interest expense, which decreases retained earnings and increases the liability.
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