Accrued Interest

Accrued interest refers to the interest that has been earned but not yet paid on a loan, deposit, or investment. It represents the amount of interest that has accumulated over a period of time, typically since the last interest payment date.

In the context of loans, accrued interest is the amount of interest that has been charged on the outstanding principal balance but has not yet been paid by the borrower. This unpaid interest continues to accumulate and is added to the total amount owed.

This is an important concept in finance as it helps to accurately reflect the true cost or return of a financial instrument over a specific period, even if the interest payments are not made or received on a daily basis.