Accrued Expenses (Accrued Liabilities) Worksheet With Answers
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11Section 3
ACCRUED EXPENSES (ACCRUED LIABILITIES)
Introduction
Accrued expenses are expenses that have been incurred, but not yet paid for.
To put it another way, an accrued expense is paid after being recorded on
the books. Every adjusting entry for accrued expenses debits an expense
account, increasing expenses on the income statement and reducing net
income, and credits a payable account, increasing liabilities on the balance
sheet.
How to Record Accrued Expenses
The general entry to record an accrued expense is:
[Various Titles] Expense
(income statement expense account)
[Various Titles] Payable
(balance sheet liability account)
To accrue
expense
Examples of Accrued Expenses
Accrued expenses include the following:
• • Interest owed but not yet paid on borrowed funds.
Interest Expense
Interest Payable
• • Rent owed, but not yet paid.
Rent Expense
Rent Payable
• • Commissions and royalties owed but not yet paid.
Commission [or Royalty] Expense
Commission [or Royalty] Payable
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