Finance costs
Finance costs are expenses associated with financing, such as interest on borrowings. They are accounted for in the appropriate period and classified under the applicable presentation requirements. If 150 remains unpaid at the reporting date, it is included in the period’s interest expense and recognised as an accrued liability.
Worked example
A loan carries annual interest of 600; unpaid interest for the period is accrued.
Common mistake
Treating repayment of the loan principal as an interest expense.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Supporting | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: interest expense