How-to · Banking and cash
How to record interest earned
Record bank interest as income when the bank credits it: debit the bank account and credit Interest Income, an other-income account kept apart from sales. Use the date on the statement.
How-to guides / Interest earned
The accounting behind it
Interest isn't earned from your main business, so it belongs below operating income as other income. That keeps your sales and gross margin clean.
Interest is income when it is credited to your account, whether or not you withdraw it.
Interest on a GIC or term deposit that is paid at maturity can be accrued at year-end if you keep accrual books.
| Account | Debit | Credit |
|---|---|---|
| Bank | Interest | |
| Interest Income | Interest |
Worked example: monthly interest on savings
Your business savings account earns $12.37 of interest in June, credited on June 30.
| Account | Debit | Credit |
|---|---|---|
| Savings | $12.37 | |
| Interest Income | $12.37 |
Common mistakes
- Recording interest as sales, which overstates revenue.
- Netting interest earned against bank fees.
- Skipping small amounts so the reconciliation never balances to the cent.
In the US and in Canada
United States
Banks generally issue Form 1099-INT when they pay you $10 or more of interest in a year. Report the interest whether or not you receive the form.
Canada
Financial institutions don't have to issue a T5 slip when the interest paid to you for the year is under $50, but the interest is still income to report.
In AcboBooks
- From the bank feed. In Banking → Bank Feeds, set the interest line's category to Interest Income and click Accept.
- Or by hand. Go to Banking → Make Deposit, choose Deposit to and the Date, and add a line with From account Interest Income and the amount. Click Save Deposit.
Interest Income is in the default chart of accounts as an Other Income account.
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Questions
Is bank interest revenue?
It is income, but other income, not sales revenue. Keep it in its own account.
When do I get a 1099-INT?
Generally when a bank pays you $10 or more of interest in the year.
Do I get a T5 for bank interest in Canada?
Only if the interest for the year is $50 or more; below that, no slip is required but the interest is still taxable.
Related how-to guides
Terms used here
Sources
Updated October 25, 2026. General bookkeeping information, not tax, legal or accounting advice. Rules differ by state and province and change over time; check with the IRS, the CRA or your accountant for your own situation.
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