Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 34 - No. 42)
What is the effect on the balance sheet when recognizing accrued interest expense?
Increase in liabilities and decrease in assets.
Increase in both liabilities and expenses.
Decrease in both assets and liabilities.
Decrease in both assets and equity.
Explanation
Accrued interest expense increases the liability (interest payable) and decreases the retained earnings.
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