Sometimes companies expense, but don’t have to pay away.

How do they keep track of

the unpaid expenses? They can account for them via two types of payable accounts

Income tax payable

Sometimes, a business owes taxes for a certain year that are not due until the
following year. The unpaid amount is recorded in an income tax payable account and
paid in increments through the following year.

Accrued expenses payable

Businesses have to calculate and record expenses for which they have not been billed
 Unused vacation days that carry over to the following year
 Interest that isn’t due until the end of a loan period
 Bonuses owed to executives and sales people

These accruals are made throughout the year and recorded in a accrued expenses
payable account.