Accrued expenses are expenses incurred but not yet paid. Which journal entry reflects this?

• A. Debit Expense; Credit Accounts Payable
• B. Debit Accounts Payable; Credit Expense
• C. Debit Revenue; Credit Cash
• D. Debit Cash; Credit Expense

Answer: (A)

Accrued expenses are costs that have been incurred in the period but haven’t been paid yet, so we recognize them by increasing both the expense and a liability. The expense account is debited to reflect the cost incurred, and a liability is created by crediting accounts payable, showing the amount owed to suppliers. This entry matches the accrual basis of accounting, which records expenses when incurred regardless of when cash is paid.

If and when the company later pays, the entry would be to Debit Accounts Payable and Credit Cash to settle the liability. The other options would either reverse the effect (reducing both expense and liability) or involve revenue or cash in a scenario that doesn’t reflect an expense incurred but not paid.