Explore commonly used personal finance terms.
Accrued interest is the accumulated interest on a loan or investment that has been earned by the lender or investor but has not yet been paid by the borrower. For example, in bonds, interest accrues daily and is paid periodically. The amount of accrued interest is included in the bond’s purchase price. Accounting for accrued interest is important for accurate financial reporting, as it affects both the income statement (for earned interest) and balance sheet (for liabilities owed).
