Question

Interest expense is: Group of answer choices The effective interest rate times the amount of the debt outstanding during the interest period. The stated interest rate times the amount of the debt outstanding during the interest period. The stated interest rate times the face amount of the debt. The effective interest rate times the face amount of the debt.

Answer 1

The effective interest rate times the amount of the debt outstanding during the interest period.

Step-by-step explanation:

Interest expense refers to the amount of money that is paid on the borrowing amount at a particular interest rate. If a person borrow some amount of money from the bank then he have to pay interest on the borrowing amount for a particular time period.

For example:

Borrowing amount = $10,000

Interest rate = 10%

Simple interest = Principle amount × Interest rate

= $10,000 × 0.1

= $1,000