PRC-1 · Chapter 4 · Question 11 of 100
'Alpha Industries' secured a bank loan of Rs. 1,000,000 at a 12% annual interest rate. Interest is payable in equal quarterly installments. If the last quarter's interest was unpaid at year-end, what is the accrued interest liability?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 30,000
Explanation
The total annual interest is Rs. 1,000,000 x 12% = Rs. 120,000. One quarter (three months) of interest is Rs. 120,000 x (3/12) = Rs. 30,000, which is the accrued liability.
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