Accrued expenses

Last updated: 2021-06-21

An accrued expense is a type of debt. The liability corresponds to the cost of a good or service that the company consumed during a financial year, but for which they were not invoiced or paid for before the balance sheet date.

Accrued costs usually arise when the company bought the goods or services at the end of the year and where the invoicing takes place afterwards. At the closing, the cost is estimated and this amount is recorded as a liability. When the invoice is then received during the next financial year, the liability for accrued costs is deducted. The cost for the current year is also reduced by the same amount that was taken up as a liability in the previous financial year.

Examples of accrued costs:

• Electricity consumption
• Phone call
• Accrued interest costs
• Holiday pay for staff
• Goods or services paid in arrears