PRC-1 · Chapter 4 · Question 68 of 100
A loan of Rs. 45,000 at 10% interest per year was given to a staff member. No interest has been received during the year. What are the accounting entries to accrue this interest income?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Debit Accrued Interest Income, Credit Interest Income
Explanation
To record earned but uncollected income, you must increase the asset (Debit Accrued Interest Income / Receivable) and increase the revenue (Credit Interest Income).
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