Which of the following best describes the accrual of interest?

A) Assets and stockholders' equity decrease.
B) Assets and liabilities decrease.
C) Net income and expenses decrease.
D) Expenses and liabilities increase.

Accrual of Interest

The process of recognizing interest earned or incurred on outstanding loans or debt securities over a specific period, regardless of whether the cash has been received or paid.

Expenses

The costs of operating the business that are incurred to generate revenues during the period.

Liabilities

Financial obligations or debts owed by a business to another entity, typically resulting from past transactions or events.