What is accrued expenses?


Accrued Expenses

Businesses use certain services before they pay for them. Common examples are utilities like electricity, water and telephones.  It could take a month or more, for example, for TANESCO to send a user an electricity bill.  Each accounting period's profit and loss account should be charged with the expenses incurred in that period regardless of whether such expenses have been paid for or not by the end of the period.  Any portion of the expense which has not yet been paid will be carried forward into the next accounting period as a liability.

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