Accrued expense is expense which has been incurred but not yet paid.

Expense must be recorded in the accounting period in which it is incurred. Therefore, accrued expense
must be recognized in the accounting period in which it occurs rather than in the following period in
which it will be paid.

As expense will be debited to record the accrued expense, a corresponding payable must be created to
account for the credit side of the transaction. The accounting entry to record accrued expense will
therefore be as follows:

Debit Expense (Income Statement)

Credit Expense Payable (Balance Sheet)