What do you mean by Accrued Expenses ?
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Answer Posted / ruchi
Accrued expenses are those expenses actually incurred but,
yet to be paid for by the business. They are also provided
for and adjusted in the financial statement.
Accrued expenses or liabilities are shown under the current
liabilities in the balance sheet. To record accrued
expenses, a company debits (increases) an expense account
and credits (increases) a liability account. These
adjusting journal entries recognize expenses incurred but
not yet paid (i.e. obligation or liability). If the company
does not make such an adjusting entry, expenses (in the
income statement) as well as current liabilities (in the
balance sheet) will be understated, while equity will be
overstated, as the result.
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