Interest Payable
At the end of each accounting period, the company should review the loans it has outstanding and see whether any interest has accrued during the period. On some loans, interest is paid only at the maturity of the loan. For accounting purposes, we want to show the interest that has been incurred through the financial statement date, even if the interest won't be paid for a while. Since the company has had the use of the money, we will make an adjustment to record the interest. The mechanics of the adjustment will be covered in Chapter 18.
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