Accrued Expense

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.

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Accrued Expense

On a balance sheet, an expense that is recognized before it is paid. Accrued expenses are recorded as liabilities and are recognized because of the extremely high likelihood of payment. Accrued expenses are generally periodic payments; examples include salaries and debt payments. They are recorded as "accrued" on a balance sheet the date that the company may expect the payment to be made and remain there until they are actually paid.

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Accrued Expense

What Does Accrued Expense Mean?

An accounting expense (current liability) recognized on the company's books before it actually is paid for. Such expenses are typically periodic and are recorded on a company's balance sheet because of the high probability that they ultimately will be collected.

Investopedia explains Accrued Expense

Accrued expenses are the opposite of prepaid expenses. Typical company accrued expenses include wages, interest, and taxes. Even though they will be paid on a future date, they are recorded on the balance sheet until the moment they are paid. An example would be interest that accrues on a simple bank loan.

Related Terms:
• Accrual Accounting
• Accrued Interest
• Balance Sheet
• Gross Income
• Liability