The concept of interest expense is as follows:

Interest expense (Interestexpense) refers to the interest expense on temporary borrowing. Under the premise that the realization of receipts and payments is the basis for accounting, so-called expenditures should be based on actual payments, that is, capital outflows, marking a decrease in cash and bank deposits. As far as interest expenses are concerned, when interest is calculated on personal accounts, there is no outflow of funds, and there is no decrease in cash or bank deposits. Therefore, interest calculated on individuals should not be included as interest expenses.

Accounting processing:

This account accounts for the interest expenses incurred by enterprises (finance), including various deposits absorbed (unit deposits, personal deposits, credit card deposits, special deposits and on-loan funds, etc.), interest expenses arising from fund transactions with other financial institutions (central bank, interbank, etc.), selling and repurchasing financial assets, and unconfirmed financing expenses allocated on a regular basis, etc. This account should be calculated in detail according to the interest expense items.

On the balance sheet date, the enterprise should calculate and determine the amount of various interest expenses in accordance with the financial instrument recognition and measurement standards, debit this account, and calculate the amount of interest payable based on the nominal interest rate agreed in the contract. Accounts such as "Interest Payable" and "Financial Assets Sold for Repurchase" are credited, and accounts such as "Deposits Absorbed - Interest Adjustment" are debited or credited according to the difference. At the end of the period, the balance of this account should be transferred to the "profit for the year" account. There will be no balance in this account after the transfer.