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Accrued Liabilities or Accrued Expenses are those expenses that arise from unpaid balances that exist based on contractual obligations or tax laws. The concept of accrued liabilities supports the practice of matching of operating and other expenses to the time period in which the liability was created, not necessarily when it will be paid. The most common accrued liabilities or expenses are: - Accrued Property Taxes - Although there is some flexibility in accounting for these taxes, the accrual recognizes the creation of a tax obligation for property even though those taxes are not due to the collecting authority.
- Accrued Payroll Taxes - As wages are earned by employees, there is an immediate obligation for the payment of both FICA and FUTA taxes.
Accrued liabilities and expenses appear in the current liabilities section of the balances sheet. |
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