Accrued Expenses
Definition: Expenses incurred but not paid
Scope:BroadDifficulty:Easy
Expenses incurred but not paid
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Accrue wages | ||
| Employees earned $4,200 not yet paid. | ||
| Wages ExpenseExpense+ | $4,200 | |
| Wages PayableLiability+ | $4,200 | |
| Expense recognized in the period incurred. | ||
| 2. Accrue interest on note payable | ||
| $500 interest incurred but not yet due. | ||
| Interest ExpenseExpense+ | $500 | |
| Interest PayableLiability+ | $500 | |
| Matching principle—expense in period of borrowing. | ||
| 3. Accrue utilities | ||
| December utility bill $350 not yet received. | ||
| Utilities ExpenseExpense+ | $350 | |
| Utilities PayableLiability+ | $350 | |
| Liability recognized before bill arrives. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Wages ExpenseWages ExpenseExpenseA cost incurred in the process of earning revenue. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$4,200.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$4,200.00
Wages PayableWages PayableLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$4,200.00
Normal bal. ▶
$4,200.00
Interest ExpenseExpense account — cost of borrowing money. Debits increase the balance. Credits decrease the balance.ExpenseA cost incurred in the process of earning revenue. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$500.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$500.00
Interest PayableCurrent liability — interest that has been incurred but not yet paid. Credits increase the balance at period-end accrual; debits decrease it when payment is made.LiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$500.00
Normal bal. ▶
$500.00
Utilities ExpenseUtilities ExpenseExpenseA cost incurred in the process of earning revenue. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$350.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$350.00
Utilities PayableUtilities PayableLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$350.00
Normal bal. ▶
$350.00
DurationShort-Term
External Links
- Accrual#Accrued expense — Wikipedia