In the Exhibit of Net Investment Income, what does 'interest due & accrued' represent?

• A. Interest due & accrued is the interest that is due but not yet paid.
• B. It reflects interest that has already been paid.
• C. It represents a capital gain.
• D. It is the tax expense.

Answer: (A)

Interest due and accrued shows investment income that has been earned during the period but has not yet been paid. Under accrual accounting, revenue is recognized when it is earned, not when cash is received, so this item appears as an interest receivable until the cash actually arrives. It reflects the timing difference between earning the interest and receiving the cash. It is not the interest that has already been paid, nor a capital gain, nor a tax expense.