What is accrued expense and accrued income?

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In this topic, we will learn about the Accrued expenses and accrued income because both they are opposite to each other and easy to understand

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Every person who belongs to the accounting filed listen a word accrued expenses and if someone ask about this you feel  shame why I don't know about this question. so here is the answer of your question what is accrued expense.

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Accrued expenditure is the expenditure that has been incurred but not yet paid.

The expenditure should be recorded in the accounting period in which it is spent.Therefore, the accrued expenditure should be identified in the accounting period in which it is compared to the following period in which this payment will be made.

Since the expense will be debited to record the derivative expenditure, the credit payout should be made in the account for the same amount.

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Journal Entry For Accrued expense

you are  ABC company and you have received a telephone expense bill  of $100 on 25 on Dec but it will be payable on 3rd of Jan and so you have to close your account and you have to  count that expenses in Dec so that time you have to create a journal entry for the accrued expense

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At the time of expense is occurred

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Expense account  Debit                     $100

Accrued expense Credit                                     $100

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Meaning of this entry: This entry means we booked the expense in that period

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At the payment of Expense

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Accrued expense Debit                      $100

Bank                  Credit                                       $100

 

Meaning of this entry: At the time of payment of expense we will create this entry

 

 

So if understand the concept of accrued expense then you can easily understand the accrued income because accrued income is just opposite of accrued expense 

 

 

 

 

Accrued income is the income which is earned but did not receive

we have to do the accounting entry for accrued income because in accounting period we have earned an income but we did not receive. 

 

Jurnal Entry for Accrued income

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you are  ABC company and you have earned a interest  of $100 on 25 on Dec but it will be Receivable on 3rd of Jan and so you have to close your account and you have to  count that expenses in Dec so that time you have to create a journal entry for the accrued expense

 

At the time of income is occurred

 

 

Accrued income  Debit                     $100

Interest                 Credit                                     $100

 

At the time receipt  of Income

 

Bank                                    Debit                      $100

Accrued  Income                 Credit                                       $100