Glossary
Accrued expense
An accrued expense is a cost you have already used but not yet paid or not yet received a bill for.
What it means for a shop owner
Examples are electricity used before the bill arrives and wages for the last days of the month. It is recorded as a liability that shows on the balance sheet. Without it the month profit looks bigger than it is.
A worked example
You used 250 of electricity this month and the bill has not come. You record 250 as an expense and an accrued liability.
Related
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