Interest income represents the money earned by an individual or entity from investments that generate interest over time. This can include income from savings accounts, certificates of deposit (CDs), fixed deposits, government or corporate bonds, loans extended to others, or other fixed-interest securities.

For example, if a company invests surplus cash into a high-yield savings account, the amount credited periodically as interest by the bank becomes the company's interest income. It is typically recognized as income in financial statements when earned, according to accounting principles.

Proper accounting for interest income is vital as it often plays a significant role in financial planning and analysis. Including interest income in financial statements provides an accurate picture of overall earnings.