Start with the date you are reviewing
A ledger can show interest building up before the next contractual payment date. That amount is accrued. Due interest is the amount payable by the date you are reviewing. One agreement can have both overdue amounts from an earlier period and interest building up for a future period.
Suppose a ₹3,00,000 agreement specifies ₹3,000 interest for the month and makes it payable on 30 September. Assume ₹1,500 has accrued by the halfway point and nothing was due from an earlier month.
Record the payment and recheck the balance
On 30 September, ₹3,000 is due. If the borrower pays ₹2,000 and the full payment is applied to interest, ₹1,000 remains due. The principal stays at ₹3,00,000. When October interest starts accruing, record that separately from the ₹1,000 carried forward.
When comparing two reports, match their as-of date and agreement terms. Check the calculation convention, payment dates, and whether any interest was capitalised. Interest that has moved into principal is already part of the outstanding principal figure.
Three snapshots of the same agreement
| Snapshot | Accrued and not yet due | Due and unpaid |
|---|---|---|
| 15 September | ₹1,500 | ₹0 |
| 30 September, before payment | ₹0 | ₹3,000 |
| 30 September, after ₹2,000 applied to interest | ₹0 | ₹1,000 |
The dates and amounts are fictional. The agreement determines the due date and calculation method.