Definition of Accrued Interest

The accrued interest is the interest earned on a bond or loan that has not yet been paid to the lender by the borrower.

Points to remember:

• The accrued interest is accumulated on a debt since the last interest payment date.
• This amount is used for calculating, at the end of an accounting period, the amount of unpaid interest that is payable by or receivable to a business.

Example
For a 10% interest rate on a $10,000 loan, if the payment is to be received on the 15th day of the month, and the additional amount of interest receivable from the 16th to 30th day of the month, the total amount of accrued interest is (10% x (15/365)) x $10,000 = $41.10