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Accrued Expense

   Also found in: Medical, Legal, Wikipedia, Hutchinson 0.01 sec.
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.

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.

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



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? Mentioned in ? References in periodicals archive
 
To deduct an accrued expense, an accrual-basis taxpayer must satisfy an all-events test.
Thus, the accrued liability on the balance sheet would reflect the difference between cumulative accrued expense and amounts paid (or funded).
The IRS argued that once section 267(a)(2) disallowed a deduction for an accrued expense for a given tax year, the expense could not be deducted until it was paid.
 
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