What is an Accrued Expense?
An accrued expense refers to any expense incurred and reported during an accounting period, but for which payment has not yet been made.
How Does an Accrued Expense Work?
There are certain expenses which a company may incur over the course of an accounting period (usually a quarter), but which may not actually be paid until a later time. Such expenses are accounted for as short-term liabilities on a company's balance sheet and may include utilities, wages and salaries, rents, and periodic interest on outstanding loans.
Why Does an Accrued Expense Matter?
Though they are not yet paid, accrued expenses are reflected on the balance sheet for the period during which they are incurred. This is because they were accrued by a company's revenue-generating operations during a given period. Once paid, the accrued expenses are removed from the balance sheet.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.