what is interest expense
What is an 'Interest Expense'. The cost incurred by an entity for borrowed funds. Interest expense is a non-operating expense shown on the income statement. It represents interest payable on any type of borrowings â bonds, loans, convertible debt or lines of credit. It is basically calculated as the interest rate times the outstanding principal amount of the debt. Interest expense on the income statement represents interest accrued during the period covered by the financial statements, and not the amount of interest actually paid over that period.
What it is: Interest expense is the cost of money. Interest expense is recorded on the income statement. Let's assume you need $500,000 to buy a house. The price of borrowing that money is interest, and it is expressed as a percentage of the amount of money you obtain.