Q: What is the difference in Accounting between Accrued Interest and Interest Expense?
A: The difference lies between what is included on the Balance Sheet and what is included on the Income Statement. These balances are not going to be the same depending on certain variables because…
Accrued Interest Payable = The amount of interest that has not yet been paid to the customer. This interest is due, that has been earned by the lender that has not been paid yet. This can span multiple reporting periods if it has not been paid, or only part of a reporting period if it was paid during the period. This is usually driven by the due date of the payment and the actual payment of the interest.
Interest Expense = The amount of interest on the income statement that is has been incurred during the period reported.