Question

Describe the reason that accrued expenses often require adjusting entries but not in every situation.

Answer 1

Accrued Expenses -

Accrued expense are the expenses which are pending to be paid at the end of the financial year. Financial statement are prepared based on accrual basis means incomes are booked as per they are earned without being the money received. Likewise in case of expenses which are incurred in the current financial year are booked whether or not that expenses are paid or not.

Generally we come to know at the end of financial year that this expense is accrued means pending to be paid.

In case if we have not received the bill for any particular expenses at the end of the financial year then there is need to require any adjusting entry the expense will directly be accrued.