How to distinguish between the use of finance charges and the interest payable

It is easy to distinguish between financial expenses and interest payable, financial expenses are the expenses incurred by enterprises in financing, for example, when lending bank money, bank interest should be paid, at the end of the month, when the bank settles interest, the enterprise will pay the bank according to the interest calculated by the bank, and the money we pay will be placed in the account of "financial expenses", and the accounting entries are: debit: financial expenses, credit:

Bank deposit, if the enterprise has borrowed money from the bank, at the end of the month, you did not go to the bank to get the interest note, when making accounts, you put forward the interest in advance according to the previous amount, and did not withdraw the payment in your own account, or the bank has automatically collected you just did not get back the interest note, at this time, for the stability of the business operation, business results, there will be no big fluctuations, there will be interest, the interest payable, the entry is: borrow: financial expenses, credit:

Interest payable (generally not used like this, commonly used is "Withholding Expenses", just to let you understand, hehe, in general, interest payable, that is, interest has been generated, has not yet been paid when part of the financial expenses, financial expenses are only expenses incurred to raise funds, interest is a part of financial costs.

If it is raised, it is a financial expense, and if it is not mentioned, it is interest payable.

Borrow: Finance Expenses.

Borrow; Interest payable.

If it is not mentioned at the end of the accounting period, the interest will be paid directly when it is repaid.

Your money is with the bank, and that's the finance fee.

It's not with the bank, it's something else.

Difference Between Finance Charge and Interest Payable:

1. The subjects are different.

Financial expenses are profit and loss accounts, and interest payable is liability accounts.

Second, the direction of borrowing is different.

An increase in finance costs is recorded on the debit side and an increase in interest payable is recorded on the credit side.

Third, the accounting content is different.

Financial expenses are the expenses incurred by the enterprise to raise funds required for production and operation. The interest payable is calculated as the interest payable by the enterprise in accordance with the contract.

The example questions in the question should be made as follows:

When borrowing principal:

Borrow: Bank deposit 100000

Credit: Short-term borrowing 100,000

When repaying: borrowing: short-term borrowing 100,000

Finance fee 3000

Credit: Bank deposit 103000

Difference Between Interest Payable and Finance Charges:

1. The accounting elements of the two are different. The interest payable is a liability account; Financial expenses belong to the profit and loss account.

2. The accounting methods of the two are different.

1) The interest payable is based on the accrual principle, which is included in the liability in the current period when the interest should be incurred, but it is not necessarily paid in the current period, such as the issuance of bonds by the unit, and the agreement is made to repay the principal and interest at a time when due, but the financial personnel should regularly (monthly, quarterly, and annually) accrue the interest payable.

2) The financial expenses are the actual expenses incurred and are included in the expense accounts incurred in the current period.

3. The definitions of the two are different.

1) Interest payable refers to the interest payable by the enterprise in accordance with the contract, including the interest payable on deposits, long-term loans for repayment of principal due to installments, and corporate bonds. This account can be accounted for in detail by depositor or creditor. Difference Between Interest Payable and Interest Accrued:

The interest payable belongs to borrowings, and the accrued interest belongs to corporate deposits.

2) Financial expenses refer to the financing expenses incurred by enterprises in the process of production and operation to raise funds. It includes interest expenses (minus interest income), foreign exchange gains and losses incurred during the production and operation of enterprises (some enterprises such as commodity circulation enterprises and insurance companies are separately accounted for and are not included in financial expenses), handling fees of financial institutions, cash discounts incurred or received by enterprises, etc. However, the interest expenses incurred during the preparation period of the enterprise should be included in the start-up expenses; The borrowing costs that should be capitalized for the acquisition, construction or production of assets that meet the conditions for capitalization shall be accounted for in the accounts of "construction in progress" and "manufacturing expenses".

If there is no provision, borrow the financial expenses to the bank deposit, if the financial expenses have been accrued, then borrow the financial expenses to credit the interest payable, and to borrow the interest payable when paying.

Interest is raised to reflect the accrual principle of finance.

The main difference between interest payable and financial expenses is that the accounting elements of the two are different, the definitions of the two are different, the content of the accounting of the two is different, and so on.

1. The accounting elements of the two are different.

The interest payable belongs to the liability account, which increases on the credit side and decreases on the debit side, and there can be a balance at the end of the period. Finance belongs to the profit and loss account, the increase is on the debit side, the decrease is on the credit side, and there is no balance at the end of the period.

2. The definitions of the two are different.

The interest payable belongs to the borrowing, and the interest payable in accordance with the contract includes the interest payable on long-term loans, corporate bonds, etc., which are absorbed and paid in installments. Financial expenses refer to the financing expenses incurred by enterprises in the process of production and operation in order to raise funds.

3. The content of the two accounts is different.

The interest payable is agreed in the accounting of interest payable, including the absorption of deposits, long-term loans with interest payment in installments and repayment of principal at maturity, the interest payable on corporate bonds, and the interest expenses incurred during the production and operation of the enterprise, exchange gains and losses, handling fees of financial institutions, cash discounts incurred by the enterprise or cash discounts received, etc.

Accounting treatment of interest payable:

1. On the balance sheet date, the interest expense shall be calculated and determined according to the amortized cost and the effective interest rate, and the accounts of "interest expense", "construction in progress", "financial expenses" and "R&D expenditure" shall be debited, and the unpaid interest payable shall be calculated and determined according to the contract interest rate, and this account shall be credited, and the account of "long-term borrowing - interest adjustment" shall be debited or credited according to the difference.

2. If the difference between the contract interest rate and the actual interest rate is small, the contract interest rate can also be used to calculate and determine the interest fee. When the interest is actually paid, this account is debited, and the account "Bank Deposit" is credited.

3. The credit balance at the end of the period reflects the unpaid interest payable by the enterprise.

The above content reference: Encyclopedia - Interest Payable.