Accrued Expenses

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Accrued expenses are accounting expenses that have been recorded, but not yet paid

Accrued expenses are costs that a company has recognized for accounting purposes, but which is yet to pay for. Under the accrual method of accounting, companies will sometimes recognize and record expenses even before they are paid, as an expense's payment date is often not the best true measure of when the expense occurred. Such expenses are said to be accrued. Examples of items that can be classified as accrued expenses are taxes, payroll and interest.

The opposite of accrued expenses are prepaid expense. It occurs when a company pays for some goods or services in advance.


  • A company may hire a consultant in March, but not pay his or her invoice until June. The expense should still be classified as a March expense.
  • A company incurs $20,000 in taxes in 2008. These taxes are due for payment in March 2009. Because they've been incurred already, the taxes show up on the company's January 2009 balance sheet as an accrued expense. However, they won't be paid till March 2009.
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