A company has a 4-month, 11%, $10,000 Notes Payable account in its general ledger at the end of the year. The note matures two months after the end of the accounting period. Which statement is true?

Answer

		No interest is accrued, since interest is due when the note matures.
		Interest revenue must be accrued at the end of the accounting period.
		The notes payable could generate a gain if the note is paid off early.
		The interest was paid when the cash was borrowed.
		Interest expense must be accrued at the end of the accounting period.