2016-12-21 00:00:00 Finance and Accounting English Using accrued expenses for your accounting should help you more accurately reflect the income statement of your small business. https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2017/03/08214543/Small-business-owner-at-desk-with-laptop-and-financial-paperwork.jpg Small Business Terms: What Are Accrued Expenses?

Small Business Terms: What Are Accrued Expenses?

0 min read

Accrued expenses are costs that have been incurred but not yet recorded. Subsequently, these appear in the financial statements if an adjusting entry is made before their preparation. For instance, unless your payroll period happens to end at quarter or year end, you have certain expenses — such as payroll — that have accrued, even though you have not made a cash payment. You can make an adjusting entry to record the amount of payroll expense that has accrued. Another example is interest on debt which has accrued between payment periods, but has not yet been paid.

Using accrual accounting more accurately reflects the financial statements of your small business. This will allow you to better compare your income statements from one period to another. Otherwise, your expenses could be distorted by timing differences from one year to to another.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Setting a Sales Price for Your Small Accounting Firm

You want to sell your accounting firm, but do you know what…

Read more

Have You Planned for Buying Out Your Small Business Equity Partner?

When starting a new business with an equity partner, it is easy…

Read more

Boost Your Amazon Sales With Optimized Product Content

Third-party sellers account for more than half of Amazon’s marketplace paid unit…

Read more