PRC-1 · Chapter 4 · Question 91 of 100
On November 1, a company borrowed Rs. 2,000,000 at 9% annual interest. Interest and principal are payable in 6 months. What is the interest expense to be accrued for the year ended December 31?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 30,000
Explanation
The loan was outstanding for 2 months (November and December) in the current year. Rs. 2,000,000 x 9% x (2/12) = Rs. 30,000.
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