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    dheni's Avatar
    dheni Posts: 1, Reputation: 1
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    #1

    Jul 18, 2010, 06:18 PM
    Why is accrued expense a liability
    Why is accrued expense a liability and is recorded under trial balance in credit column.
    Question regarding to preparing a ten column worksheet.
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Jul 23, 2010, 07:38 AM

    Because it is an expense that you will have to pay.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #3

    Jul 24, 2010, 04:21 AM

    The definition of "accrual" is something that happens now but will not be paid until later.

    So an accrued revenue is when you have earned the revenue but you will not be paid until later - i.e. receivables, which is due to you from something already earned. (You could call it accrued revenues, but it's not usually.)

    An accrued expense is when you've incurred the expense but will not be paying it until later. Payables can be from accrued expenses, but the account title "accrued expenses" is more likely to be things like salaries payable, income tax payable, etc. just lumped together into one account. But those are all incurred expenses that will be paid later - hence, "accrued expenses," which represents the amount still owed. Therefore a liability and a credit account.

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