Answer Posted / chandra
It is an Incurred expenditure but not paid yet, therefore
accrue ( increase ) the expenditure so we are not missing
out on our liability. This way we account all expenditure
that is to be paid , but not paid yet.
In this case, interest is accrued when the interest becomes
due on on debt obligation on a stipulated time but not paid
yet or no actual cash out flow, but we still take into
account the interest expenditure by accounting or accruing it.
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