Question

At the end of the accounting period, $300 of interest has been earned but not yet received on notes receivable. What is the amount of interest earned but not yet received?

1) $100
2) $200
3) $300
4) $400

Answer 1

The correct amount of interest earned but not yet received is $300, representing accrued interest in standard accounting practices.

Step-by-step explanation:

The amount of interest earned but not yet received on notes receivable is $300. This is an example of accrued interest, which refers to the interest that has been earned over a period of time, but the cash has not yet been received. Recording this amount is important for maintaining accurate financial records. It appears as a current asset on the balance sheet and affects the net income on the income statement. This is a standard accounting practice and reflects the accrual basis of accounting, where revenue is recognized when earned, not necessarily when received.