Glossary · Financial statements
Accrued expense
An accrued expense is a cost a business has incurred in a period but has not yet been billed for or paid. It is recorded at period-end with an adjusting entry, as an expense and a liability, so the profit and loss carries every cost that belongs to that period.
Glossary / Accrued expense · Also called Accrued liability, Accrual
How it works
Common accrued expenses are wages earned but not yet paid at month-end, interest on a loan since the last payment, utilities used before the bill arrives, and a bonus earned this year but paid next year.
The entry is usually reversed at the start of the next period. When the real bill or payroll arrives, it is recorded in the normal way and the reversal cancels the accrual, so the cost is not counted twice.
Accrued expenses are an accrual-basis idea. On cash-basis books, the cost simply counts when paid.
Worked example: Wages across a month-end
A shop pays staff every second Friday. The last payday in March is March 27, and the next is April 10. Staff work March 28 to 31, earning $2,400 of wages that will be paid on April 10.
On March 31 the bookkeeper records an accrued expense: Wages expense $2,400 and Accrued Wages liability $2,400. March's profit and loss now includes all of March's wages. On April 1 the entry is reversed, and the April 10 payroll records the wages as usual.
In AcboBooks
AcboBooks records accruals as general journal entries, which will not save until debits equal credits. A journal entry can be flagged as an accountant adjustment so it appears on the Adjusting Journal Entries report and the adjusted trial balance.
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Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.
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