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    Question

    A company purchases a fixed-income security that

    provides interest on a half-yearly basis. The interest is accrued but not yet received at the balance sheet date. How should this be accounted for under AS 13?
    A The interest should be recorded as a liability. Correct Answer Incorrect Answer
    B The interest should be ignored until received. Correct Answer Incorrect Answer
    C The interest should be added to the cost of investment. Correct Answer Incorrect Answer
    D The interest should be recognised as income on an accrual basis. Correct Answer Incorrect Answer

    Solution

    The correct answer is D

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