0
Accrued rent expense is classified as an Expense. It's not classified as a liability. Expenses are paid out of "Revenue" and they affect "Retained Earnings". When you do a Trial Balance before closing out your accounts, Expenses are actually listed with Assets, because all "Expenses" contain a debit balance.
There is only one reason an expense would be listed as a liability and that is if you post the transaction before paying it and then the account "Expense Payable" is used and is a liability as it is a "Payable" and actually is not listed with the term "expense" in it. For example if you have Rent Expense, then the two accounts used are Rent Expense and Rent Payable. Notice the "liability" account is actually titled "rent payable" not "rent expense".
The term accrued is merely the term used in Accrual Accounting, which simply means that all transactions are recorded as they occur or "accrue" as opposed to cash basis accounting where transactions are recorded only when cash is paid out or received.
In actuality if you are trying to classify your accounts, such as the question, classify the following accounts as either an Asset, Liability or Owners Equity Account, Expenses will be classified as an Owners Equity Account as they affect Retained Earnings, which in turn affects Owners Equity (stockholders equity).
What else can I help you with?
Is rent expense a liability?
rent is an expense while outstanding rent is a liability
Is electricity a liability or asset?
Electricity expense is an expense account while accrued electricity payable is a liability account
What the difference between prepaid and accrued expense?
A prepaid expense is an expense you pay before you have incurred an obligation to pay it. Paying three months rent in advance is an example. Prepaid expenses are viewed as an asset on the balance sheet which is reduced as the expense is incurred. For example, every month in which rent falls due would be a reduction of your prepaid rent asset and a recognition of an expense equal to the amount of the reduction. Accrued expenses, on the other hand, are essentially the opposite. For example, assume you didn't prepay your rent. As the rent expense is incurred, a liability is created. After you actually make your payment, the liability is reduced by the amount of your payment.
Is paying rent considered a liability?
If rent is payable then it is liability for business but if rent is already paid then it is not liability but it is expense.
How do you enter accrued expenses in the general ledger?
Accrued expenses are entered as liabilities in the general ledger. Debit expense and credit accrued liability.
Is accrued expense a financial liability?
If you are doing adjusting entries, an accrued expense will affect a balance sheet account (payable) and an income statement account (expense). Such as accrued interest at the end of year would be: Interest Expense (Debit) Interest Payable (Credit)
Is rent expense an asset or liability?
Its an asset.
Is salary expense liability?
Salary expense is not a liability - it is an expense; however, if salaries are accrued between periods, there will likely be a liability account named "Accrued Salaries" or "Salary Due."Associated with salaries; however, are various taxes. Those taxes are not necessarily submitted to government entities at the same time as the salary is paid to employees. There will likely be liability account(s) associated with those taxes.
What should be the journal entry for rent due but not paid?
Dr Rent Expense Cr Accrued Rent Expense (L) (Rent Due) then Dr Accrued Rent Expense (L) Cr Bank (When it is paid)
What happens if an accrued liability for salaries is not recorded?
If an accrued liability is not recorded, then it is not a liability on the balance sheet. Not sure if the employee's could sue - that's a legal question - but if it was paid at a later date then it would be an expense at the time the liability was paid. If you mean to ask - what happens if an accrued liability for salaries is not paid, or is not timely paid - then the IRS can deny the deduction.
What are accrued expenses reported on the balance sheet as?
As you accrue expenses, they show up as a CREDIT on the balance sheet, and a DEBIT on the income statement. Then as you actually incur the expense and pay out, you would CREDIT your cash account, and DEBIT the accrued liability account on the balance sheet. For example, if you expect to spend $12,000/year on business travelling expenses, you would accrue $1000 monthly as a CREDIT to your accrued liability account (on the balance sheet), then a DEBIT to the expense account (on the income statement). When you actually do incur the expense and pay out, you CREDIT your cash account, and DEBIT the accrued liability account. Thus, the accrued liability account is cleared out and eventually washed out to zero.
If you have over accrued a liability on the books Which would be an appropriate entry to remedy the situation?
debit cash, credit expense
