Definition:
Accrued liability is another term for accrued expense. It refers to a liability that has been incurred but not yet paid.
Key points to remember:
- Incurred but unpaid: Accrued liabilities represent expenses or obligations that have been incurred by a company but haven’t been paid for yet.
- Common examples: Examples include interest on loans, salaries and wages, utilities, and taxes.
- Financial statements: Accrued liabilities are recorded on the balance sheet as current liabilities.
- Cash flow management: Understanding accrued liabilities is important for effective cash flow management, as they represent future cash outflows.
In essence, accrued liabilities are a type of debt that a company owes for expenses or obligations that have been incurred but not yet paid.
