Accrued Expenses

Accrued expenses are expenses which has been incurred but at the end of the accounting period not yet recorded in the accounting ledgers by the normal transaction process.

A business has an annual premises rent of 12,000 but an invoice has not been received from the landlord and the rental expense has not been recorded in the accounting records.

Accrued Expenses Journal Entry

At the end of the month the business needs to accrue the cost of the rent for that period, the accrued expenses journal entry is as follows:

Accrued Expenses Journal Entry
Account Debit Credit
Rent expense 1,000
Accrued expense 1,000
Total 1,000 1,000

The Accounting Equation

The Accounting Equation, Assets = Liabilities + Owners Equity means that the total assets of the business are always equal to the total liabilities plus the owners equity of the business. This is true at any time and applies to each transaction. For this transaction the Accounting equation is shown in the following table.

Accrued Expense – Accounting Equation
Assets = Liabilities + Owners Equity
None = Accrued expenses + Rent expense
0 = 1,000 + -1,000

In this case the balance sheet liabilities (accrued expenses) has been increased by 1,000, and the income statement has a rent expense of 1,000. The expense reduces the net income, retained earnings, and therefore owners equity in the business.

Popular mdct.ru Examples

Another mdct.ru example for you to discover.

Accrued Expenses November 6th, 2016Team

You May Also Like


Related pages


payroll accounting entriesdeferred revenue haircutamortization schedule exampleoverstating ending inventorystock turnover periodreducing balance interest calculatorexpenses claim templateperpetuity factorformula of operating leveragetrade creditors definitionmarkup and margin accountingreceivables turnover ratio calculatorreducing balance method formula for depreciationaccounting correcting entriespayback period advantagesentry for prepaid expenseadjustments for unearned revenuefuture value lump sumperpetuity annuityexcel calculate marginhow to calculate manufacturing overhead applied to work in processcurrent ratio and quick ratio analysisfv of annuity calculatorentry for prepaid expenseexcel chart of accounts templateaccounting entries for buyback of sharesaccrued expenses entryhow to calculate total assets turnoverpreparation of petty cash bookcollection period ratio formulawhat are reconciling itemsreplenish petty cash entrythe basic accounting equation ispmt function formulastraight line depreciation rate formulasimple bookkeeping excelcurrent assets debtorspv pmtperiodic journal entriescalculate profit margin excelcost of goods sold depreciationexample of tally entryhow to calculate roce ratioamortization journal entrycalculating pay back periodwhat is journal voucher in accountingexample of requisition slip formbookkeeping terms and principlesdepreciation methods reducing balancewhat is freight out in accountingfinancial accounting debits and creditsannuity factor table excelmanufacturing overhead journal entryhow do you calculate quick ratiothe understatement of the ending inventory balance causeshow to find total manufacturing overhead costcash count spreadsheetarr in accountingprepaid expenses entry in tallycreditors turnover daysamortisation of intangible assetsdefinition of zero based budgetingbookkeeping debit creditwhat is the journal entry for prepaid expensesintangible assets journal entrybookkeeping meaningallowance for accounts receivableproperty plant and equipment journal entriesformula of operating leveragereconciliation booksexamples of accounts payable and accounts receivableexcel data entry form template excel 2007npv tablesfinding cost of goods sold on income statementdefinition of imprest