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What are Accrued or Outstanding Expenses?- Let us explain!
The term “accrued expense” refers to any accounting expense that is recognized in the accounting books before they are paid. This is a liability, and is typically current. Such types of expenses are generally periodic and these are documented on the balance sheet of a company as it is highly probably they would be collected.
Accrued expenses are just the reverse of prepaid expenses. Many companies generally incur periodic expenses like taxes, wages and salaries and interest. Although these have to be paid at some time in the future, these are indicated on the balance sheet of a firm – from the time when payment can be reasonably expected by a firm to the time when they are actually paid. Liabilities can be accrued by a firm for any number of obligations, and there can be recording of the accruals on the balance sheet of the company as long-term or even as short-term liability. So do you want to handle a paper on accrued expenses? We are ready to offer you wow-worthy services!
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Federal unemployment taxes, Medicare, Social Security and other Payroll taxes are some of the liabilities that can be accrued while getting ready for payment prior to the time taxes are past due. Accrued liabilities exist only when an accrual method of accounting is used. The cash method is another alternative, which does not accrue liabilities. Such types of liabilities are entered into financial records during a specific period and are reversed typically during the next period.
In accrual accounting, all the expenses are to be recognized during the period when they are incurred. Accrued or Outstanding expenses happen to be recorded during the same time when associated revenues are reported to offer precise information to financial statement users about the costs needed for income generation.
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