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accrued interest business definition
- Interest owed but not yet paid. Like other accrued expenses, accrued interest is listed as a liability on the borrower's balance sheet.
- The amount of interest added to the price at which bonds are traded. For example, if a 12% coupon bond's last record date for an interest payment was two months ago, the buyer must pay the seller $20 (two months' interest at 1% per month on $1,000 principal) in accrued interest in addition to the quoted price. This additional expense will be recovered when the new owner receives six months' interest after holding the bond only four months.
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