Accrued Interest Definition
Accrued Interest is any interest amount that has been incurred although not yet paid.
Accrued Interest refers to any interest incurred that has not yet been paid, these interest amounts will arise where a debt, loan or some other financial obligation has been agreed. An Accrued Interest amount will be recorded by both the borrower and lender.
For the borrower an Accrued Interest amount will usually be a component of their Current Liabilities, expected to be paid within the next twelve months. This is recorded as a debit on their interest expense aswell as a credit on their Accrued Interest (payable) accounts.
For the lender an Accrued Interest amount will usually be a component of their Current Assets, expected to be recieved within the next twelve months. This is recorded as a credit on their interest revenue aswell as a debit on their Accrued Interest (receivable) accounts