Question

The interest accrual entry debits an owners' equity account and credits a. An asset accounts b....

The interest accrual entry debits an owners' equity account and credits

a. An asset accounts

b. A liability accounts

c. An owners' equity accounts

d. None of the above

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Homework Answers

Answer #1

Journal Entry will be

INTEREST EXPENSES XXX

ACCURED INTEREST XXX

Since interest expenses will reduce the retained earnings, so ultimately owners equity will decrease

so one effect is debit owners equity

Accured interest is current liability, so we have to credit the liability account to complete the journal entry

Hence Option B is correct.

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