The business expense arising from borrowing money is:

• A. Interest
• B. Dividend
• C. Tax
• D. Amortization

Answer: (A)

Interest is the cost of borrowing money. When a business borrows funds, the lender charges interest for the use of that money, and this cost is recorded as interest expense on the income statement. It directly reduces net income and often appears as a cash outflow in financing activities. If a loan has origination fees, those may be amortized over the life of the loan, but the ongoing expense tied to borrowing itself is interest. Dividends are distributions to owners and are not a borrowing cost, tax is a government levy unrelated to borrowing, and amortization relates to spreading out the cost of intangible assets (or loan fees) over time, not the regular expense of borrowing.