Difference between “Accrued Income” and “Outstanding Income”

Accrued Income as well as outstanding income are earned by the business and not yet received but in case of accrued’ income, the income has not become due on the business, while outstanding income is an income which has become due to the business.

For example, if a loan of Rs. 1,00,000 has been given @ 12% p.a. and interest is payable monthly, if interest for one month, i.e., Rs. 1,000 has not been received by the business, the income will be earned as an outstanding Income since interest has become due but it has not yet been received by the business.

On the other hand, if interest on certain securities is payable on definite dates, interest may have been earned by the business, but it will become due not earlier than that definite date.

For example, if a business has purchased’ 8% government securities for Rs.1,00,000 on which interest is payable on 30th June and 31st December, for the account year ending on 31st March interest for 3 months (i.e.), Rs. 2,000 for January to March) will be considered as accrued interest and not outstanding interest.

This is because interest will become due after’ 30th June only on 31st December and not earlier. Outstanding Interest Account and Interest Accrued Account are personal accounts. They. will, therefore, be shown on the ‘asset side’ in the Balance Sheet.

Tags: B.Com

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