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A tire manufacturing company took a bank loan in November 2014 to increase production. The yearly interest payable on the loan is $10,000. The
company made the first interest payment of $10,000 on February 21, 2015. However, it recorded this amount as a loan interest expense in its financial
statements for the year 2014. To which accounting principle is this practice related? The company's accounting period is from January 1 to December
31.
objectivity principle
revenue recognition principle
o accrual principle
Dual-aspect principle

Respuesta :

Answer: accrual principle

Accounting principle is this practice related to the accrual principle.

We have given that,

A tire manufacturing company took a bank loan in November 2014 to increase production.

The yearly interest payable on the loan is $10,000.

The company made the first interest payment of $10,000 on February 21, 2015.

We have to determine the accounting principle is this practice related

What is the accrual principle?

Accrual of something is, in finance, the adding together of interest or different investments over a period of time.

Therefore, Accounting principle is this practice related to the accrual principle.

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