The interest income obtained by the company mainly includes the interest income realized from various loans, financial assets purchased for resale, etc. When obtaining interest income, how to account for it?

Accounting processing of interest income

The interest income account accounts for the interest income recognized by the enterprise (finance), including various types of loans issued (syndicated loans, trade financing, discounts and rediscounts) Lending funds, agreement overdrafts, credit card overdrafts, on-loans, advances, etc.), interest income from fund transactions with other financial institutions (central bank, interbank, etc.), financial assets purchased under resale agreements, etc.

On the balance sheet date, the enterprise should calculate and determine the receivable and uncollected interest based on the contract interest rate, debit "interest receivable" and other accounts, calculate and determine the interest income based on amortized cost and actual interest rate, and credit Accounts such as "Loan - Interest Adjustment" will be debited or credited according to the difference.

If the difference between the actual interest rate and the contract interest rate is small, the contract interest rate can also be used to calculate the interest income.

At the end of the period, the balance of this account should be transferred to the "profit for the year" account. There will be no balance in this account after the transfer.

Accounting entries for interest income in financial expenses

Accounting entries for interest income among financial expenses

Debit: bank deposit

Credit: Financial Expenses - Interest Income

If it is a manual account, both entries can be made:

Debit: Bank Deposits

Credit: Financial Expenses - Interest income

or

Debit: bank deposit (red letter)

Loan: financial expenses - interest income (red letter)

Interest income The difference between interest receivable and interest receivable

Interest income refers to the income earned by an enterprise from providing funds to others but not constituting an equity investment, or from others occupying the enterprise's funds, including deposit interest, loan interest, and bond interest. Interest, arrears interest and other income. Interest income is recognized based on the date when the debtor pays interest as stipulated in the contract. Interest receivable refers to the interest that a company should receive for its bond investment. This includes the interest on bonds that have reached the interest payment period but have not yet been collected in the purchase price of the bonds, and the interest generated during the holding period of the bonds that pay interest in installments and repay the principal upon maturity. It does not include the interest that should be charged on long-term bonds purchased by enterprises for one-time repayment of principal and interest upon maturity, which should be calculated through the secondary account "accrued interest" under the financial assets account.