Debit or Credit Accrued Expenses?
Q: If the amount has been debited into accrued expenses, do we need to credit it after making the payment (so that the balance would be zero in accrued expenses)?
A: Accrued Expenses is a liability account. It is not
an expense. Accrued
means "is/are owed" or "owing".
Therefore, when you record an expense owing, you do the following:Dr Expense
Cr Accrued Expenses (liability account)
When you make the payment you record:Dr Accrued Expenses
Apart from when you're making a payment to the creditor, a debit
to the accrued expense account is highly unusual and would mean a correction to how much is owed to the creditor.
It would mean you owed the creditor less
. The entries above are the standard, usual entries for owing a creditor and then paying off the debt.
Check out the lesson on accrued expenses
for a full explanation of the debit and credit entry as well as a nice example.
Then check out accrued expenses - part 2
for a full explanation of what happens when you pay off the accrued expense.Related questions:
- Michael Celender
Founder of Accounting Basics for StudentsReturn from Debit or Credit Accrued Expenses? to Basic Accounting Questions