Accrued interest is recorded on an income statement at the end of an accounting period. Accrued interest is recorded differently for the borrower and lender. Those who must pay interest will record the accrued interest as an expense on the income statement and a liability on the balance sheet. If payable within one year, it is recorded as a current liability. If payable in more than 12 months, it is recorded as a long-term liability. Lenders record the accused interest as revenue on the income statement and as a current or long-term asset on the balance sheet.