Question

Does an accrual normally have a debit or a credit balance? Please elaborate.

Answer 1

Ans: Normally, an accured expenses journal entry is a Debit to an expense account. The Debit entry increase your expenses. You can also apply a Credit to an accrued liabilities account. Your expenses increase on the income statement.

Accruals are earned revenue and incurred expenses that have yet to be received or paid. In Balance-sheet , Accrued expense shown in current liabilities and as well they involve non-cash assets.

Both accrued expenses and accounts payable are current liabilities, meaning they are short-term debts to be paid within a year. But, the nature entries differ. Accounts payable includes amount you need to pay for items or services bought on credit. Accured liabilities recognise any unrecorded expenses incurred but not billed.

When payment is due, and the customers makes the payment,an accountant for that company would record an adjustment to accured revenue. The accountant would make an adjusting journal entry in which the amount of cash received by the customer would be debited to cash account on the balance sheet and the same amount of cash received would be credited to the accured revenue account or accounts receivable account, reducing that account.

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