Frequently Asked Questions(FAQ)

What is the purpose of accrued expenses?

Accrued expenses allow accountants to keep track of payments that must be made at a later date for services or goods that were already received.

Where are accrued expenses located on the balance sheet?

Most accrued expenses are short-term, which means they are located under the current liabilities section on the balance sheet.

What is a reversing entry and how does it relate to accrued expenses?

Reversing entries are used in accrual accounting. Accrued expenses are recorded as soon as they are incurred; once the expenses are paid for, the entry is “reversed.”

Are accrued expenses assets or liabilities?

Accrued expenses represent the amount of money owed, which means that they fall under liabilities.

About the Authors

Tetiana Sitiugina-Babiuk

Written by: Tetiana Sitiugina-Babiuk

Financial Sector Specialist and Content Strategist

Independent writer, content strategist, and financial sector specialist. Tatiana has an extensive experience in working with financial institutions such as Bank of Canada and Risk Management unit at FinDev Canada. She holds an MA in Financial Risk Management from the University of Toronto.

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