Debit or Credit Accrued Expenses?

by Anonymous

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

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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