What are accrued expenses and when are they recorded?

it's an expense which related to the current financial period but we did not pay it until the end of this period so we consider it as current liabilities

An accrued expense is an expense that has been incurred, but for which there is not yet any expenditure documentation. In place of the expenditure documentation, a journal entry is created to record an accrued expense, as well as an offsetting liability (which is usually classified as a current liability in the balance sheet). In the absence of a journal entry, the expense would not appear at all in the entity's financial statements in the period incurred, which would result in reported profits being too high in that period. In short, accrued expenses are recorded to increase the accuracy of the financial statements, so that expenses are more closely aligned with those revenues with which they are associated.

A prepaid expense is the reverse of an accrued expense, since a liability is being paid before the underlying service or asset has been consumed. Consequently, a prepaid asset initially appears on the balance sheet as an asset.

Accrued Expenses in Practice

Examples of expenses that are are commonly accrued include:

• Interest on loans, for which no lender invoice has yet been received
• Goods received and consumed or sold, for which no supplier invoice has yet been received
• Services received, for which no supplier invoice has yet been received
• Taxes incurred, for which no invoice from a government entity has yet been received
• Wages incurred, for which payment to employees has not yet been made

Expenses, the payment of which have become certain, need to be recorded in the accounts, as a liability. For example deffered cost of dismantling the additions to the rented building's facade.