What is credited in the journal entry that accrues interest expense?

When accruing interest expense, the journal entry typically involves recognizing the obligation to pay that interest in the future. In this case, Interest Payable is credited because it represents a liability that the company is acknowledging as part of its financial obligations. By crediting Interest Payable, the company is recording that it owes interest that has incurred but has not yet been paid. This aligns with the accrual accounting principle, which mandates that expenses must be recognized when incurred, not necessarily when they are paid.

This process increases the interest expense recognized on the income statement while simultaneously reflecting a corresponding increase in liabilities on the balance sheet. This helps maintain accurate financial records that show both the cost of borrowing and the obligation to pay in the future. The other choices either do not accurately reflect an increase in liabilities or relate to aspects of transactions that do not involve the accrual of interest expense.