What is the Difference between Accrued Income and Accrued Expenses?

by Alfred
(Ho Chi Minh, Vietnam)

Ho Chi Minh City

Ho Chi Minh City


Q: Why does the Accrued Income effect the assets but Accrued Expenses is not? Both indicate that cash was paid or received later but why is that difference occuring?


Thanks for your explanation.

A:
Accrued income is a debtor (someone owes you) which is an asset. Accrued expense is a creditor and liability (you owe someone else). See the lessons on accrued income and also the lesson on accrued expenses for a better understanding and full explanation of the concepts. You must understand the concept of the accrual basis of accounting, these lessons will help with that.

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