what is accrued liability 
the term accrued liability refers to an expense incurred but not yet paid for by a business these are costs for goods and services already delivered to a company for which it must pay in the future a company can accrue liabilities for any number of obligations which are recorded on the company s balance sheet they are normally listed on the balance sheet as current liabilities and are adjusted at the end of an accounting period crea taylor investopediaunderstanding accrued liabilitiesan accrued liability is a financial obligation that a company incurs during a given accounting period although the goods and services may already be delivered the company has not yet paid for them in that period they are also not recorded in the company s general ledger 1 although the cash flow has yet to occur the company must still pay for the benefit received accrued liabilities which are also called accrued expenses only exist when using an accrual method of accounting 2 the concept of an accrued liability relates to timing and the matching principle under accrual accounting all expenses are to be recorded in financial statements in the period in which they are incurred which may differ from the period in which they are paid the expenses are recorded in the same period when related revenues are reported to provide financial statement users with accurate information regarding the costs required to generate revenue the cash basis or cash method is an alternative way to record expenses but it doesn t accrue liabilities accrued liabilities are entered into the financial records during one period and are typically reversed in the next when paid this allows for the actual expense to be recorded at the accurate dollar amount when payment is made in full accrued liabilities only exist when using an accrual method of accounting types of accrued liabilitiesthere are two types of accrued liabilities that companies must account for we ve listed some of the most important details about each below 2this kind of accrued liability is also referred to as a recurring liability as such these expenses normally occur as part of a company s day to day operations for instance accrued interest payable to a creditor for a financial obligation such as a loan is considered a routine or recurring liability the company may be charged interest but won t pay for it until the next accounting period 2non routine accrued liabilities are expenses that don t occur regularly this is why they re also called infrequent accrued liabilities they aren t part of a company s normal operating activities a non routine liability may therefore be an unexpected expense that a company may be billed for but won t have to pay until the next accounting period 2journal entry for an accrued liabilityaccounting for an accrued liability requires a journal entry an accountant usually marks a debit and a credit to their expense accounts and accrued liability accounts respectively 3this is then reversed when the next accounting period begins and the payment is made the accounting department debits the accrued liability account and credits the expense account which reverses out the original transaction 2