A note that bears interest accrues interest costs throughout the course of its existence. The correct response to the question is option (b).
Interest costs are associated with the cost of borrowing money. It refers to the charge a lender imposes on a borrower in return for using their money. On the income statement, interest expenditure might represent the cost of borrowing money from bond holders, banks, and other sources. You record the interest expense as a journal entry when you take out a loan, not when you pay it back at the end of the year or month.
According to the terms of the agreement on an interest-bearing note, interest is accrued on money lent by a lender to a borrower.
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