Accrued Expenses
An amount of money that a business owes in a particular period which it records in its accounts but that it does not pay in that period.
Accrued expenses are expenses that are recognized at the time they are incurred, even though cash has not yet been paid. These expenses are paired up against revenue via the matching principle from the GAAP (Generally Accepted Accounting Principles). For those who are unaware of the matching principle, it states that you record revenues and all related expenses in the accounting period in which they occur. This is true regardless of whether or not cash has actually been received by the seller or paid out by the buyer.
Types of Accrued Expenses
There are different types of accrued expenses. However, in this article, we focus on the more common accrued expenses that you will run into as an accountant from time to time:
1. Accrued Salaries and Wages
2. Accrued Interest
Accrued Expenses. Corporate Finance Institute. Retrieved from: https://corporatefinanceinstitute.com/resources/accounting/accrued-expenses/
Accrued Expenses. Cambridge Dictionary. Retrieved from: https://dictionary.cambridge.org/dictionary/english/accrued-expense