interest expense under accrual accounting is that portion of...

interest expense under accrual accounting is that portion of interest allocated to the reporting period. interest paid is the actual cash amount of interest paid over the reporting period.

eg if a co borrows $100K @ 10% interest on 1 Jan, and the interest ($10K) is payable in advance, then at 30 Jun the cashflow statement will report interest paid of $10K, and the P&L will report interest expense of $5K. The balance ($5K) will be on the balance sheet as a prepayments asset.