Accrued Expenses Accounting

Accrued Expenses Accounting

In this article we would explain the Accrued Expenses accounting. This concept requires that expenses should be recorded in the period to which these relate (not necessarily on the bases of payment). Some payment is to be made in next year, but relates to this Year, Examples of such expenses

a)    Salary for the month December,2016 ( paid in January)

b)   Utilities bills of December (shall issue in January 2017).

Accrued expenses are recorded on the bases of estimation, because evidence shall be available next year.

Journal Entry for accrued Expenses

Current Year

Expenses are charged to profit & loss account and a liability are created.

Date	Particulars	Dr	Cr
	Electricity  A/c	10,000
	Electricity payable A/c		10,000

Next Year

Liability is cleared off by paying cash; an actual expense may be more or less than actual expense, which may be charged to next Year (because it is negligible).

Date	Particulars	Dr	Cr
	Electricity payable A/c	12,000
	Cash A/c		10,000
	Expenses		2,000