Both these terms refer to the none-receipt of income by the business entity and are added to income when accounts are finalized on accrual basis. Outstanding income means that amount of income which is due and receivable but not yet received. There is a legal right to receive it immediately form the other party. Accrued income means that amount which has been earned is not get due. The accrued income is calculated on day-to-day basis and there is no legal right to force the other party to pay it immediately. Suppose a firm has invested Rs. 50,000 in 12% Debentures on 1st January 1998. Interest is payable half yearly on 30th June and 31st December respectively. The firm closes its books on 31st March. Now it the interest has not been paid by the company for the half year ending on 31st December even on 31st March 1999, it is a case of outstanding interest. But interest for three months – from 1st January to 31st March 1999 is accrued in the sense that it is simply earned but not receivable.

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