What is the journal entry to accrue interest revenue?

The correct journal entry to accrue interest revenue is to debit Interest Receivable and credit Interest Revenue. This entry reflects the recognition of interest that has been earned but not yet received in cash at the end of the accounting period.

When interest is accrued, it indicates that the company has earned revenue, even though no cash has been exchanged yet. By debiting Interest Receivable, the company recognizes an asset that represents money owed to it in the future. At the same time, crediting Interest Revenue acknowledges that the company has earned this income, which is reflected in its financial performance.

This accrual accounting method aligns with the revenue recognition principle, ensuring that income is recorded in the period it is earned, rather than when cash is collected.