Think of accrued interest like a tab at a bar.
Every day a bond is held, interest is building up. It hasn’t been paid yet — but it’s owed. When you buy a bond between coupon payments, you’re stepping in mid-tab. The seller held that bond while the interest was running up, so they got paid for their time. You pay them that interest upfront as part of the purchase price. Then, when the next coupon payment comes in, you get the full check.
It evens out. You paid it, you get it back.
Buyer pays accrued interest to the seller
Buyer gets it back in the next full coupon payment
It is NOT part of the bond’s price — it is separate
Corporate and municipal bonds use a 30/360 day count
Government bonds use actual days