Question

Which of the following is treated as an
asset?
[1 mark]
Interest received in advance
O Accrued interest
O Outstanding interest
Interest received​

Answer 1

Answer:

Accrued interest is treated as an asset.

Answer 2

Answer:

The following that is treated as an asset is Accrued Interest.

Explanation:

In Accounting, we can define the Accrued interest as the amount of interest which can be incurred, with a specific date, with a loan or financial obligation and which was not yet been paid out.

• Types of Accrued Interest:

1) Interest Revenue

2) Lender

3) Interest expense

Formula to calculate the Accrued Interest:

Face value * coupon rate/ 365 * Accrual period

An Accrued Interest will be counted as asset which is current, it may be for the lender, current liability and for the borrower and the payment must be made only within one year.

In Journal Entry, the Accrued Interest is defined as the method which records the amount of interest on the loan and in which it already occurs it is to be paid by one of the borrower and finally, received by a lender.

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