Question

______ is defined as the "cost of borrowing money." Since the account represents a cost incurred on borrowed money, it is classified as a(n) ______ account under stockholders' equity.

Answer 1

Interest is the "cost of borrowing money" and is classified as an expense account under stockholders' equity.

Step-by-step explanation:

The subject that is defined as the "cost of borrowing money" is interest. Interest is the amount charged by a lender for the use of borrowed money. Since interest represents a cost incurred on borrowed money, it is classified as an expense account under stockholders' equity.