{"id":19310,"date":"2021-01-28T23:28:25","date_gmt":"2021-01-29T04:28:25","guid":{"rendered":"https:\/\/www.acomba.com\/?p=19310"},"modified":"2021-02-25T23:28:51","modified_gmt":"2021-02-26T04:28:51","slug":"accrued-expenses-what-are-they-and-when-are-they-accounted-for","status":"publish","type":"post","link":"https:\/\/www.acomba.com\/en\/blog\/accrued-expenses-what-are-they-and-when-are-they-accounted-for\/","title":{"rendered":"Accrued expenses:<br class='hidden-xs'> What are they and<br class='hidden-xs'> when are they<br class='hidden-xs'> accounted for?<br><br>"},"content":{"rendered":"<h2 class=\"h3\">\r\n   Accounting for and closely following your accrued expenses allows you to produce \r\n\tfinancial statements that are more representative of reality and provide you with \r\n\ta much more accurate picture of your financial situation.  \r\n<\/h2>\r\n\r\n<p>\r\n   Businesses must take into account the expenses they have incurred in the past and for \r\n\twhich payment will soon be due. Accrual accounting allows a business to follow these \r\n\texpenses efficiently (which are considered to be debts), whether they are accrued \r\n\texpenses or accounts payable. \r\n<\/p>\r\n\r\n<p>\r\n    To begin, let\u2019s take a closer look at what accrued expenses are exactly and how you \r\n\tmust account for them to benefit from a good overview at the end of each period. \r\n<\/p>\r\n\r\n<h2>\r\n   What are accrued expenses?\r\n<\/h2>\r\n\r\n<p>\r\n    Accrued expenses are an unpaid expense, an amount that a business owes for a product or \r\n\tservice already received. This is an expense that must be accounted for when the product \r\n\tor service is received, rather than when it is billed. \r\n<\/p>\r\n\r\n<p>\r\n\tAccrued expenses are considered to be a short-term debt. Even though this debt is still not legally \r\n\ttangible since no invoice has been produced, it still constitutes a liability and is accounted for at the end of \r\n\tthe year, even if it is has not yet given rise to an outflow of money. \r\n<\/p>\r\n\r\n<p>\r\n   <strong>Here are a few examples of current accrued expenses:<\/strong>\r\n<\/p>\r\n<ul>\r\n\t<li>Interest on loans<\/li>\r\n\t<li>Products or services received<\/li>\r\n\t<li>Employee salaries and vacations<\/li>\r\n\t<li>Income taxes<\/li>\r\n\t<li>Rent<\/li>\r\n<\/ul>\r\n\r\n<h2>\r\n   How should accrued expenses be accounted for?\r\n<\/h2>\r\n\r\n<p>\r\n   A company's accrued expenses must appear in its balance sheet. As explained in our article <br>\r\n\t<a href=\"\/en\/blog\/8-accounting-terms-that-all-entrepreneurs-should-know\/\">8 accounting terms that all entrepreneurs should know<\/a>, \r\n\ta balance sheet is a document which combines all data related to your business\u2019s possessions and debts, at a given time. Your balance sheet \r\n\tpresents your assets, liabilities and capital (what you have - what you owe = what you are worth).\r\n<\/p>\r\n\r\n<img decoding=\"async\"\r\n    src=\"\/wp-content\/uploads-svn\/blog\/les-frais-courus-que-sont-ils-et-quand-sont-ils-comptabilises\/image_01_en.png\"\r\n    alt=\"\"\r\n\/>\r\n\r\n<p>\r\n    Your accrued expenses must be accounted for as liabilities in your balance sheet and sometimes these expenses will \r\n\thave to be estimated. For recurring expenses, such as rent, the amount is always the same, but for certain sporadic \r\n\texpenses for which you have not yet received an invoice, you can enter your best estimate. \r\n<\/p>\r\n\r\n<h2>\r\n   What is the difference between accrued expenses and accounts payable?\r\n<\/h2>\r\n\r\n<h3 class=\"chiffre\">\r\n\t<span class=\"titre\">Accrued expenses<\/span>\r\n<\/h3>\r\n\r\n<p>\r\n   Accrued expenses are expenses which are known and expected by the company, but which cannot be paid until \r\n\tthey have been billed to the company. They are still entered in the balance sheet so that the business \r\n\thas a better idea of the state of its liabilities. This allows management to make better decisions concerning \r\n\tthe management of their budget, since all imminent payments are known.  \r\n<\/p>\r\n\r\n<h3 class=\"chiffre\">\r\n\t<span class=\"titre\">Accounts payable<\/span>\r\n<\/h3>\r\n\r\n<p>\r\n  Accounts payable contain expenses for which the company has been billed, but which have not yet been paid (regardless of the reason). \r\n<\/p>\r\n\r\n<img decoding=\"async\"\r\n    src=\"\/wp-content\/uploads-svn\/blog\/les-frais-courus-que-sont-ils-et-quand-sont-ils-comptabilises\/image_02_en.png\"\r\n    alt=\"\"\r\n\/>\r\n\r\n<p>\r\n   These two types of expenses are recorded in the liabilities account in the balance sheet. If the business receives an \r\n\tinvoice for accrued expenses before the closing of its period, these expenses are transferred to the accounts \r\n\tpayable category. \r\n<\/p>\r\n\r\n<h3 class=\"chiffre\">\r\n    <span class=\"titre\">Here is an example that shows both types of expenses:<\/span>\r\n<\/h3>\r\n\r\n<p> \r\n\tThe multifunction printer at your office breaks down. You do business with a repair company which sends you a \r\n\tspecialized repairer. After inspecting the printer, the repairer comes to the conclusion that a part needs \r\n\tto be replaced. He tells you which one and you order it. Once the part is delivered, the repairer comes back to install it. \r\n<\/p>\r\n\r\n<p>\r\n    Upon leaving, he gives you an invoice for his time. Since you have an invoice for this expense, it must be entered in the accounts payable in your balance sheet. \r\n\r\n<\/p>\r\n\r\n<p>\r\n   An invoice has not yet been produced for the part ordered and received, but this expense must still be accounted for. \r\n\tIt must be entered as an accrued expense in your balance sheet, while you wait for the invoice to be issued. \r\n<\/p>\r\n\r\n<h2>\r\n   Benefit from specialized tools\r\n<\/h2>\r\n\r\n<p>\r\n  Your accounting software can be used to manage several accounting operations easily and efficiently, \r\n\tincluding those mentioned in this article. By being specialized for accounting management, your software \r\n\thelps you to be accurate in your reports, greatly reduce the risk of error and closely follow your monthly and annual data.\r\n<\/p>\r\n\r\n<p>\r\n  Are you looking for a solution to manage your accounting? Contact our team of experts to learn more about our many specialized products!\r\n<\/p>\r\n\r\n<a href=\"https:\/\/www.acomba.com\/en\/\" class=\"button\">Discover Acomba<\/a>\r\n","protected":false},"excerpt":{"rendered":"Accounting for your accrued expenses allows you to produce more accurate financial statements. Discover how to do that here!","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[72,121,83],"tags":[],"class_list":["post-19310","post","type-post","status-publish","format-standard","hentry","category-accounting","category-blog","category-management-tips"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.acomba.com\/en\/wp-json\/wp\/v2\/posts\/19310","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.acomba.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.acomba.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.acomba.com\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.acomba.com\/en\/wp-json\/wp\/v2\/comments?post=19310"}],"version-history":[{"count":1,"href":"https:\/\/www.acomba.com\/en\/wp-json\/wp\/v2\/posts\/19310\/revisions"}],"predecessor-version":[{"id":19311,"href":"https:\/\/www.acomba.com\/en\/wp-json\/wp\/v2\/posts\/19310\/revisions\/19311"}],"wp:attachment":[{"href":"https:\/\/www.acomba.com\/en\/wp-json\/wp\/v2\/media?parent=19310"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.acomba.com\/en\/wp-json\/wp\/v2\/categories?post=19310"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.acomba.com\/en\/wp-json\/wp\/v2\/tags?post=19310"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}