Question 41

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What effects would the accrual of $160 of interest on a note payable have on financial statements?

I.	Balance sheet:	Liabilities are decreased by $160
II.	Income statement:	Expenses are increased by $160
III.	Balance sheet:	Retained earnings are decreased by $160
IV.	Balance sheet:	Cash assets are decreased by $160
V.	Balance sheet:	Liabilities are increased by $160

Select one:

A. II, IV and V

B. II, III and V

C. II, III and IV

D. I, II and III