accrued expense

Accrued Expense

An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection.

Notes:

Accrued expenses are the opposite of prepaid expenses. Firms will typically incur periodic expenses such as wages, interest and taxes. Even though they are to be paid at some future date, they are indicated on the firm's balance sheet at the point in time when the firm can reasonably expect their payment, until the time they are paid.

An example would be accruing interest that is building up on a bank loan.

See also: Accrual Accounting, Accrued Interest

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accrued expense

An expense incurred but not yet paid. A firm incurs certain expenses such as wages, interest, and taxes that are paid only periodically. From the time expenses are incurred until the date they are paid, expenses accrue in a firm's balance sheet.