Bank interest
Bank interest is interest credited or charged on a bank balance. Interest earned is income; overdraft or loan interest is a finance cost. Record the transaction from the business’s perspective. If interest appears on the bank statement before the cash book, update the cash book and relevant income or expense account. Unpaid interest may also require an accrual at year end.
Worked example
The bank credits $40 interest on a deposit: debit bank $40 and credit interest income $40.
Common mistake
A credit on the bank’s statement normally increases the customer’s deposit balance; do not copy statement debit and credit labels mechanically into the business’s ledger.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | F3 | Supporting | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |