What Is Accrued Interest?

Accrued interest refers to the amount of interest that has been incurred as of a specific date on a loan, bond, or other financial obligation but has not yet been paid. It is calculated as of the last day of an accounting period and represents an obligation or a revenue that will likely be collected or paid within one year. Accrued interest is part of accrual accounting and follows the guidelines of the revenue recognition and matching principles of accounting. It is booked at the end of an accounting period as an adjusting journal entry and is equivalent to the accumulated interest that has yet to be paid as of the end date of an accounting period. 33bb