Final answer:
It is a) true that the balance in the "Interest Expense" account, which records the interest cost incurred, can be different from the balance in the "Interest Payable" account, which records the outstanding interest owed, after adjustments for the accounting period.
Step-by-step explanation:
The question is regarding the difference between the Interest Expense account and the Interest Payable account after adjustments are posted.
To answer the question: it is a)true that the balances in the "Interest Expense" account and the "Interest Payable" account may differ after adjustments are posted.
The Interest Expense account reflects the total interest cost incurred by the firm during a particular accounting period, while the Interest Payable account represents the amount of interest that is owed but not yet paid at the end of the accounting period.
During the adjustment process in accounting, expenses are matched with revenues in the period in which they are incurred, irrespective of when the payment is made.
This is known as the accrual basis of accounting. If the interest hasn't been paid by the end of the period, it will remain in the Interest Payable account as a liability, while the expense is recorded to reflect the economic impact during the period.