Accrued Expenses

Accrued expenses are those expenses which are listed on the income statement but are unpaid.

Accrued expenses are the liabilities that the company needs to resolve at some future date. They are listed on a company’s balance sheet as the probability of being collected is high. Although they are to be paid in the future, they are listed in the balance sheet from the day the company should expect to make the payment.

Points to remember:

• They can be considered opposite of prepaid expenses.
• Accrued expenses are generally periodic, like wages, taxes etc.
• The probability of accrued expenses getting collected is high.

Example:
As a company, you can release a statement of Accrued Expenses at the end of a financial year. It includes interest payments that are yet to be paid.