Accrued interest is always which?

Accrued interest is always which?

• A. Current asset
• B. Non-current asset
• C. Current liability
• D. Long-term liability

Answer: (A)

Accrued interest is interest that has been earned but not yet received, so it represents a future inflow of resources. On the balance sheet it appears as interest receivable, an asset. It’s classified as a current asset when the expected collection is within one year (or the operating cycle), because it will be converted to cash in the near term. If the related note or loan is longer than a year and collection is not within that period, the portion beyond one year would be a non-current (long-term) receivable. So, in typical short-term timing, accrued interest is treated as a current asset.

Accrued interest is interest that has been earned but not yet received, so it represents a future inflow of resources. On the balance sheet it appears as interest receivable, an asset. It’s classified as a current asset when the expected collection is within one year (or the operating cycle), because it will be converted to cash in the near term. If the related note or loan is longer than a year and collection is not within that period, the portion beyond one year would be a non-current (long-term) receivable. So, in typical short-term timing, accrued interest is treated as a current asset.