Sorry but I'm asking it again coz I didn't get the exact reason that why are we taking interest on investment 1,000? everytime we add full interest received during the year and if some amount is accrued then we add it. But in this question the teacher only added the accrued amount why not the left over amount received during the year.
* Additional information- that interest is accrued for 5 months.
I've got 2 different answers from 2 different teachers.
Dear Student,
Full interest for the year is shown in income and expenditure account whether accrued or recieved because income and expenditure account records all the transactions relating to current year irrespective of the fact whether it is recieved or not.
So, Interest on investment = 12% of 20000 = Rs 2400 will be shown in income and expenditure account.
So, Interest on investment = 12% of 20000 = Rs 2400 will be shown in income and expenditure account.
Regards