The debit of the "financial expense" account represents the increase of the expense, and the credit represents the offset of the expense. The financial expenses incurred by the enterprise shall be debited to this account and credited to "bank deposit", "unconfirmed financing expenses" and other accounts. The specific accounting entries are as follows:
Debit: financial expenses
Credit: bank deposit (or unconfirmed financing expense account)
Interest income, exchange gain/loss and cash discount incurred that should offset financial expenses should be debited to "bank deposit", "accounts payable" and other accounts, and credited to this account. The specific accounting entries are as follows:
Debit: bank deposit (or accounts payable)
Credit: financial expenses
The "financial expenses" account is used to calculate the financing expenses incurred by an enterprise to raise funds needed for production and operation, including interest expenses (less interest income), exchange gains and losses and related service charges, cash discounts incurred or received by the enterprise, etc. At the end of the period, the balance of this account should be transferred to the "Profit of the Year" account, and there should be no balance in this account after carrying forward.