What is debited when recording a mortgage payment?

When recording a mortgage payment, Interest Expense is debited to reflect the cost incurred for borrowing funds. This entry recognizes the interest portion of the mortgage payment as a cost that reduces the company’s net income on the income statement for the period.

In the context of a mortgage payment, the payment typically consists of two main components: principal and interest. While the principal portion reduces the balance of the mortgage liability (which would affect Notes Payable), the interest portion represents an expense recorded during the period in which it is incurred. This expense accounting is crucial for maintaining accurate financial statements, since it directly impacts profitability.

Recognizing interest as an expense aligns with accrual accounting principles, where expenses are recorded in the period in which they are incurred, regardless of when cash is actually paid. Thus, debiting Interest Expense properly reflects the financial reality of the mortgage payment being made.