Confusable que........

Internal Audit 713 views 2 replies

NITIN MULIK

PUNE

24 Points Joined February 2012

Hi friends,

I am really confused with the difference between expenses/income accrued but not due.

will you please tell me what is the exact difference between these.

Replies (2)

Kanhaiya

Nangia & Co.

1981 Points Joined July 2011

Accrued Expense - An accounting expense recognized in the books before it is paid for. It is a liability, and is usually current. These expenses are typically periodic and documented on a company's balance sheet due to the high probability that they will be collected.

Accrued Income - Income that is earned in a fund or by company by providing a service or selling a product, but has yet to be received. Mutual funds or other pooled assets that accumulate income over a period of time but only pay it out to shareholders once a year are, by definition, accruing their income. Individual companies can also accrue income without actually receiving it, which is the basis of the accrual accounting system.

Vignesh Killur

Articled Assistant

1671 Points Joined January 2011

Hi Nithin!

I will explain this concept as per my understanding with an example.

You have invested Rs. 100,000 in a fixed deposit having a term of 2 years on 1st Jan 2010, The Interest in compounded half yearly every June 30th and December 31st. That means it is added to the FD principal amount.In The first year, the Interest paid is Rs. 5,000 on June 30th & 5,000 on Dec 31st. Now you finalise your accounts on 31st March every year. Hence the Interest from January to March is interest accrued and not due. i.e Rs. 2,500 (interest for 3 months) is accrued. It becomes due only on 30 th june. And it is finally Received after 2 years on maturity. Hence in the Balance Sheet on 31st Mar 2011 the Company will have to show the Interest of Rs. 2,500 under interest accrued but not due & Rs. 10,000 as interet due and not received.

That according to me is the difference between Accrued, Due, & Receipt

Regards