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Topic
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CPA-00475 a bond issued on June 1, of the current year, has interest payment dates of April 1 and October 1. Bond interest expense for the current year ended December 1 is for a period of :
A. seven months
B. six months
C. three months
D. four months
the answer is a but I chose c. the explanation is ‘interest expense is recognized for the entire period from bond issuance through the fiscal year end. three months would only be the time period from October 1 through December 1 and this amount represents the interest accrual.’
I am really confused. I looked back at the book for example JE of bonds issued between interest date and they show ‘bond interest expense (payable)’. can someone help explain this a little better? what’s the difference between interest expense and accrual??
AUD: 64, 71, 73, 72, 78
FAR: 75 (expired), 79
BEC: 89
REG: 76FINGERS CROSSED
FAR - 75
AUD - 64/71
BEC - 85
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