Interest Expense as Other Expense

marcom · ‎November 23, 2021

I have set up my Chart of Accounts using Quickbooks' recommendations for the Account Types, and I am trying to find a place in the P&L for interest expenses in loans where we are the borrower. I have created an "Interest Expense" account and am trying to assign it a Type and Sub-type. I see that the most logical place, "Interest Paid", is listed as an "Expense" rather than an "Other Expense". I had thought that Interest Expenses were typically "Other Expenses" for most non-financial businesses. Is this incorrect? Is it acceptable to just have the Interest Expense account as "Other Expense" -> "Other Miscellaneous Expense" or is there a sound reason for having it in the regular "Expense" category?

Mostly this matters to me for Reports - whether or not Interest shows up as part of Net Operating Income or below it. I realize the info is there either way, but am trying to make it be in the right place. Any assistance would be greatly appreciated.

Rustler · ‎November 24, 2021

Technically interest expense is NOT an operating expense on the P&L since it is not a day to day type of thing over the life of the business.

But the lines are being blurred may folks put it as an operating expense

Your choice

View solution in original post

Rustler · ‎November 24, 2021

Technically interest expense is NOT an operating expense on the P&L since it is not a day to day type of thing over the life of the business.

But the lines are being blurred may folks put it as an operating expense

Your choice

annayugova · ‎December 20, 2022

I had the same question. Curious, what did you end up doing? Moved it below the line or followed Quickbooks prompts to keep it in 'Expenses' rather than 'Other expenses'? Interestingly, interest income is 'Other income' and is below the line.

marcom · ‎December 21, 2022

Hi - I ended up classifying it as "Other Expense -> Other Miscellaneous Expense" so that it would show up as an "Other Expense" rather than as an "Expense". That way I can treat "Expenses" as Operating Expenses, and everything else (including interest) as non-operating expenses, and it shows up the way I want it to on the P&L report.

mlr94549 · ‎August 26, 2023

Depends on the business. I'm a landlord and mortgage expense on each property is definitely a business operating expense for each building and hence should be included in the P&L report - but even though I have coded it as an Expense under the business, the P&L does not seem to pick it up. Strangely my P&L custom reports by Customer (aka tenant) picks up the tag headings rather than the account headings - no idea why - and as I cannot separately tag the interest line in a mortgage payment separately the P&L report is useless.

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Interest Expense as Other Expense