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Accrued Expenses

Updated on March 17, 2023

Accrued expenses are business payments, costs and liabilities which are payable at a future date. In simle terms, these are expenses which are recognised as incurred, but are yet to be paid. They are categorised as current liabilities in a company’s Balance Sheet.

Examples of Accrued Expenses

Accrued expenses for a business can be salaries, wages, interest payments, electricity, internet and phone bills, office supplies etc

Importance of tracking Accrued Expenses

Tracking and managing Accrued expenses is important because
these expenses are a liability for the company (i.e. money which must be paid out) and have a real impact on the company’s financial statements. For any business, it is important to know about the actual accrued expenses because they can have substantial impact on the cash flows.