Accrued Expense

Definition

An expense you've incurred but haven't paid yet and haven't recorded. Example: employees worked Monday–Friday, but payday isn't until next week. You owe them wages (liability) and have an expense, even though no cash has left.

Related Terms

Adjusting Entries

Journal entries made at the end of an accounting period to update accounts before preparing financial statements. These ensure revenues are recorded when earned and expenses when incurred. Common examples: accrued wages, prepaid insurance expiring, depreciation.

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