PRC-1 · Chapter 4 · Question 36 of 100
'Alpha Builders' acquired a bank loan of Rs. 2,000,000 at a 10% annual interest rate. Interest is paid quarterly. The last quarter's interest (October to December) was not paid by the financial year-end of 31 December. What is the accrued interest liability?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 50,000
Explanation
Total annual interest is Rs. 2,000,000 x 10% = Rs. 200,000. One quarter represents 3 months. Therefore, the accrued liability for one quarter is Rs. 200,000 x (3/12) = Rs. 50,000.
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