The correct answer is: B. Interest suspense account
The asset account is debited from the original value of the asset in the books of buyer and the interest suspense account is debited with the total amount of interest.
The interest suspense account is a temporary account that is used to record the interest that has accrued on a loan but has not yet been paid. The interest is recorded in this account until it is paid, at which point it is transferred to the interest income account.
The interest suspense account is used to ensure that the interest is recorded in the correct period. If the interest were not recorded in a separate account, it would be difficult to determine when the interest was actually earned.
The interest suspense account is also used to prevent the interest from being double-counted. If the interest were recorded in the asset account, it would be recorded twice: once when the loan was made and again when the interest was paid.
The interest suspense account is a valuable tool for accounting for interest. It ensures that the interest is recorded in the correct period and that it is not double-counted.
The other options are incorrect because they do not accurately reflect the accounting treatment of interest.
- Option A: The interest account is not debited with the total amount of interest. The interest suspense account is debited with the total amount of interest.
- Option C: The seller account is not debited with the total amount of interest. The interest suspense account is debited with the total amount of interest.
- Option D: All of the above is incorrect because it includes options that are not accurate.