Debit or Credit Accrued Expenses?

by Anonymous
(Unknown)

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)?


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
Cr Bank


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 Students


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