Accrued interest refers to the amount of interest that has been earned but not yet paid or received. It represents the interest that has accumulated on an investment or loan between the last payment date and the current date. For example, let's say you own a bond that pays interest every six months. If you haven't received the interest payment yet and you decide to sell the bond, you would be entitled to the interest that has accrued since the last payment. The buyer of the bond would need to compensate you for the accrued interest in addition to the purchase price of the bond.