How to record Accrued Expense in Journal Entries

Manz,

I really don't understand your use of "Accrued Expense." When the telephone bill arrives, you have two choices, enter a bill or write a check to pay the invoice.

If you choose to enter a bill, the expense is applied to your General Ledger expense account, for the current month, and the bill becomes an accounts payable.

If you choose to write a check to pay the invoice, the expense is applied to your General Ledger expense account for the current month.

In neither case is anything
b accrued.

Please expand on what you are trying to accomplish.

Hi, thanks for answering my question.
I browsed through a lot of websites lately and eventually found out how to record this accrued expense.

I didn't know accrued expense is a liability before, and now I knew it and the problem is solved!

Thanks anyway!!

Manz,

Please enlighten me. How is a telephone bill an "accrued expense?"

Hi!

It's not actually a telephone bill. It's the telephone set up bill, and is charged separately from the telephone bill. So far I haven't receive the invoice from the telephone company yet.

Manz,

I would simply wait for the bill to arrive and pay it as an expense. at least until the end of your tax year.

I used to accrue several items, until I decided it made no difference in the management decision making process.

I believe this is along the same lines. I created an account called ACCRUED AP. At the end of the year, there were $200k of expenses paid in january that should have been accrued in AP.

So Accrued AP now has 200k and AP has 190k.

Here in January, I want to reverse out the Accrued AP now that the expenses were paid. However, the JV won't let me do that.

Can you point me in the right direction?

I need a refreshing course on accrued expenses.
My situation is this, our company reserved a meeting room and paid 1/2 half of the fee in 2007 and the other in 2008.
If I make a year end adjustment, is this correct:

Accrued Expenses 1312.50
Rental Fees (1312.50)

Now how do I handle for getting this into 2008. Do I reverse the above entry. Crediting accrued expense and debiting rental fees.

A little rusty on this.

Let's see...at end of year 2007:

Accrued Expense CR
Rent Fees DR

When paid in 2008:

Cash CR
Accrued Expense DR

Arkansas,
The best way to accrue monthly costs is to create a "template" then save or memorize it. This template will be a journal entry. The major accrued costs is Payroll and payroll taxes. Other major costs are insurance, interest, property taxes, possibly rent.
In any case, set up the JE to include those costs that you want to accrue. Do the costs first as these are all debits. Now choose your accrual accounts. You may have an overall accrual account such as "Accrued Expense" but you may want to have an accrual account called "Accrued Payroll and Taxes". Now create your first JE for the end of 2007, memorize then enter it.
Recall the memorized transaction and re-date it for 1/1/8. Move each number to the opposite column. Save the transaction. You have now reversed the journal entry. Cool? You keep plugging in your expenses into QB the way you are and never worry about accruals until the end of the month (actually beginning of the next month.)

 Accrued Expenses are expenses for which have occurred, but you don't have the invoice yet.  If you're closing the month, you need to accrue for the expense in the month that it happened - even if you don't have the invoice.  You can do it one of 2 ways:

1)

Sept. - Accruing Exp.

Dr. Expense

Cr. Accrued Expenses

Oct. - Rec. Inv. - Paying it

Dr. Accrued Expenses

Cr. Cash

2)

Sept. - Accruing Exp.

Dr. Expense

Cr. Accrued Expenses

Oct. - Reverse Accruals

Dr. Accrued Expenses

Cr. Expense

Oct. - Rec. Inv. - Paying it

Dr. Expense

Cr. Cash

I think there is a much easier way to handle accrued expenses in QB.

So, accrued expenses are a liability, just like Accounts Payable.  In fact, they really are A/P but without the bills, and I agree it can be useful to distinguish between a vendor who asks for his money and vendor who has not asked for his money.

Create an account "Accrued Expenses" of type ACCOUNTS PAYABLE.  You can have as many accounts payable as you like, and not one of them has to be called "accounts payable".  To accrue an expense, simply create a bill.  NB:  ounce you have more than one accounts payable type account, at bill creation QB will ask you which payables account you want to choose.  Choose "Accrued Expenses" and you have just created an accrued expense.

When the bill arrives from the vendor, you have only to edit the QB bill, moving it from Accrued Expenses to the regular Accounts Payable account.

Of course, you will only pay bills that are in the regular Accounts Payable.

 Just in case someone stumbles across this.  One of the things I learned was that when you create a Journal Entry you have to make sure the first entry is to the A/P account, otherwise the cash and accrual will be the same.  

Going around in circles again.............. Accounting Definition of "Accruals" "There are numerous expenses in connection with a going business which accrue at the end of a fiscal period and thus become liabilities that are payable in the following period.  Usually the amounts of accrued liabilities can be determined accurately; but occasionally there is no exact basis for a computation of an amount, and it must be estimated"  ie Salaries & Wages, Interest, Commissions, Taxes, Operating Expenses, etc.                     So ONLY at the end date of a fiscal period a Journal Entry is made Debiting the various Expense accounts and Total Credit to Accrued Liabilities/Payables, the next day or beginning of the next fiscal period the aforementioned JE is REVERSED.  Has nothing to do with QB manner in recording Bills, Checks, Sales, Deposit this is strickly an Accounting Entry.