Accrued Liabilities
Expenses Incurred but Not Yet Paid
Accrued liabilities arise when expenses have been incurred before payment or before an invoice has been received. Accrual accounting requires these obligations to be recognized in the period in which the related expense is incurred.
- Accrued salaries and wages.
- Interest payable.
- Utilities payable.
- Property taxes payable.
- Professional service fees.
Tip
If an expense belongs to the current reporting period but payment occurs later, an accrued liability is usually required.
Summary
Accrued liabilities ensure proper matching of expenses with the accounting period in which they occur.