What is interest expense on income statement?

The interest payment is added to the principal to arrive at the total amount due to the lender. Interest expense appears on the income statement after operating income, as it is a non-operating expense. Interest expenses can be applied to any type of borrowing. Typically, the following items carry an interest obligation:

What is the difference between interest expense and interest payable?

Interest expense and interest payable are related concepts in accounting, but they serve different purposes and are represented differently in financial statements. Interest expense is the total cost of borrowing funds over a period and is reported on the income statement, affecting the company’s net income.

What is a company's interest expense?

Interest expense is one of the core expenses found in the income statement. A company must finance its assets either through debt or equity. With the former, the company will incur an expense related to the cost of borrowing. Understanding a company’s interest expense helps to understand its capital structure and financial performance.