Final answer:
Accrued interest is based on the number of days in the time period. The number of days is calculated based on the number of months or years.
Step-by-step explanation:
Accrued interest is based on the number of days in the time period. The number of days is calculated based on the number of months or years.
For example, if interest is being accrued on a monthly basis, then the number of days in each month will be considered. If interest is being accrued on an annual basis, then the number of days in a year will be considered.
The formula for accrued interest is:
Accrued Interest = Principal x Interest Rate x Time