An accrued expense is a cost incurred that has not yet been paid and may not yet have a supplier invoice. Under the applicable accrual policy, the business records the expense and a corresponding obligation. The amount and service period need support; an accrual is not a guess inserted to improve a report.
Get help with your monthly booksPractical records guidance · Updated October 8, 2026 · Fictional examples
A later invoice can cover work performed before month-end. The date cash is paid does not necessarily determine when the expense belongs in accrual reports. Use contracts, service records or other appropriate evidence for the accountant-approved amount.
When the bill arrives, connect it to the earlier accrual using the agreed procedure. Leaving both the accrual and full new bill as unrelated expenses can double the same cost. Review the schedule and reversal or adjustment responsibilities.
Illustrative example · Fictional data
Illustrative example: $600 of supported September services will be billed in October. A simplified September accrual records $600 expense and an obligation. October’s bill must be handled with that prior record in mind; it is not automatically another $600 of new service cost.
An invoiced supplier obligation commonly appears in payables. Accruals can cover incurred costs not yet invoiced; presentation depends on the accounting structure.
No. Reporting adjustments and tax treatment follow different applicable requirements.
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