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here is another example for us to look at imagine that a company used 2,000 worth of office supplies in the current year but did not pay any cash for them until the following year the question is how much of this expense should be included in the income statement for the current year the answer is that the company should include the full expense of 2000 as this is the value that was used in the year but then the question is since the company didnamp;#39;t actually pay for the office supplies in the current year how do we record this second half of the transaction which is the amount owed the answer is we record it as a current liability on the balance sheet the amount is called an accrued expense it is recorded as a current liability because we will have to pay the expense within the next year so in summary accrued expenses are expenses that have been reflected on the income statement but have not yet been paid for they will go on the balance sheet as an accrued expense
