Dictionary / Accrued Expenses
What does Accrued Expenses mean in accounting?
Quick definition
Accrual & timingLiability for expenses that have been incurred and are not paid but are payable at some future date. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
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Examples
Work done in March, invoice dated April 8
A plumber replaced your shop water heater on March 29. Their $2,150 invoice is dated April 8. At March 31 close you debit repairs $2,150 and credit accrued expenses $2,150 so March carries the cost. When you enter the bill in April, reverse the accrual first (or apply the bill against it) and post accounts payable to that plumber. If you leave the accrual up and also enter the bill, you expense $2,150 twice.
Wages earned through month-end, paid next Friday
You run a landscaping company, and your six-person crew earned $3,400 Monday and Tuesday through March 31, with payday Friday, April 3. At close you debit payroll expense $3,400 and credit accrued expenses $3,400. When payroll posts on April 3 in QuickBooks Online or Xero, reverse the accrual so those two days do not hit April again. This is not a prepaid expense; the work already happened, you just have not paid yet.
Why it matters
If you only book expenses when the bill or payday hits, the last week of the month drops off this P&L and lands in the next one. You will do this every month-end close if utilities, subcontractors, or payroll straddle the month. Post the accrual at close, then reverse it or apply it when the real bill or payroll posts. Accrue and enter the bill without reversing and you double the expense; skip it and a busy December looks cheap.
Keep learning
Start with the bookkeeping basics, then compare software when you are ready to pick a tool.
Getting startedBookkeeping basics for small-business ownersWhat bookkeeping is, the records you need, double-entry in plain English, and a monthly rhythm that fits a 1–50 person shop.Updated October 4, 2026
RolesWhat does a bookkeeper do?A bookkeeper records bills, invoices, and bank activity so your books stay current. See the weekly work, the month-end close, and what they do not do.Updated August 18, 2026
Monthly closeMonthly bookkeeping: what to close each monthMonth-end is the job: reconcile banks and cards, age bills and invoices, check payroll, then read the reports. A close checklist for small-business owners.Updated August 18, 2026
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What is Accrued Expenses in bookkeeping?
Liability for expenses that have been incurred and are not paid but are payable at some future date.
When should I use Accrued Expenses?
Use Accrued Expenses when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Accrued Expenses?
Accrued Expenses is used for accrued expenses entries, while Abandonment covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.