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    Question

    An account classified as Sub-standard has accrued

    interest of ₹1.2 crore during the year, which has not been actually received. How should this interest be treated in the Profit & Loss account of the bank?
    A Recognise fully as income Correct Answer Incorrect Answer
    B Recognise partially Correct Answer Incorrect Answer
    C Recognise on accrual basis Correct Answer Incorrect Answer
    D Reverse and book only on cash basis Correct Answer Incorrect Answer
    E Capitalise to loan account Correct Answer Incorrect Answer

    Solution

    For NPAs, interest is recognised only on cash basis.

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