Treatewment of interst

Originally posted by : oasis
	Please let me know how the interest accrued on loans is treated in the accounts Expecialy whetyher the interest accrues on loans which gas become NPA Should be shown in balance sheet

interest on NPA should be recognised on cash basis ,so question arises on its accrual treatment 

Debit the bank Account And Credit the interest on loan account

the loan assets of bank are 2 types 

(1) NPA( non-performing assets) 

(2) PA (Performing Assets)

Interst earned on the PA  can take into P&L A/c (Cash & Accrual basis)

but interest earned on the NPA can take into account only on the receipt basis means cash basis