Concept #1: Adjusting Journal Entries: Accrued Expenses
Practice: Wait-2-Pay, Inc. has an employee that works every day of the year for $100 per day. W2P pays its employee once per month on the 25th of the month. The company is preparing its December 31 financial statements. The entry to adjust for accrued salary expense would include:
Accrued Expenses occur when we receive the benefits of an expense, but have not paid for the expense yet. The account titles for Accrued Expenses can be written two ways. As an example, let's use wages earned by an employee, but not paid yet. This account could be written as "Accrued Wage Expense" or "Wages Payable." Both are correct!