Bookkeeping & Reporting

Accrued Expense

An accrued expense is a cost that has been incurred but not yet paid or invoiced, so it is recorded before cash leaves the business.

Quick answer

An accrued expense is a cost that has been incurred but not yet paid or invoiced, so it is recorded before cash leaves the business.

It matters because expenses can be understated if the books only reflect bills that have already been paid.

Payroll earned in the last days of a month may be accrued before the paycheck is actually issued.

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Plain-English Definition

What Accrued Expense means

An accrued expense is a cost that has been incurred but not yet paid or invoiced, so it is recorded before cash leaves the business.

Why it matters It matters because expenses can be understated if the books only reflect bills that have already been paid.
Simple example Payroll earned in the last days of a month may be accrued before the paycheck is actually issued.
Related Questions

Questions people ask about Accrued Expense

What does Accrued Expense mean?

An accrued expense is a cost that has been incurred but not yet paid or invoiced, so it is recorded before cash leaves the business.

Why does Accrued Expense matter?

It matters because expenses can be understated if the books only reflect bills that have already been paid.

What is a simple example of Accrued Expense?

Payroll earned in the last days of a month may be accrued before the paycheck is actually issued.

When should I ask a CPA about Accrued Expense?

Ask a CPA when the term changes how your books are kept, how reports are read, or how tax numbers are produced from accounting records.

How is Accrued Expense different from Accounts Payable?

Accrued Expense means An accrued expense is a cost that has been incurred but not yet paid or invoiced, so it is recorded before cash leaves the business. Accounts Payable means Accounts payable is the money a business owes vendors or suppliers for bills not yet paid. The difference is that they apply to different tax, accounting, or business situations and should not be treated as interchangeable.

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