How to record an accrued expense
A cost you have used but not yet been billed for still belongs in this year. Work out the accrual and write its journal.
In this room: 2 tasks, 7 questions
- Working out the accrual3 questions
- The journal for an accrual4 questions
An accrued expense is a cost the business has used by the year end but has not yet recorded. If no bill has arrived, the amount is worked out or estimated.
The joinery's electricity is billed every three months. The bills paid during the year come to £3,300 and cover up to 31 October.
The next bill covers 1 November to 31 January. It arrives in February and is for £960.
Two of that bill's three months, November and December, belong to this year.
Answer the questions below
2 more questions follow in this task.
The adjustment adds the cost to the expense account and records what is owed.
- Debit the expense account: the cost for the year goes up
- Credit Accrued expenses: a liability, because the business owes this money
Accrued expenses is shown under current liabilities in the statement of financial position.
Answer the questions below
3 more questions follow in this task.