Accrued Liabilities
Expenses a company has incurred but not yet paid, recorded as current obligations on the balance sheet.
What is Accrued Liabilities?
Accrued liabilities are expenses a company has incurred during an accounting period but has not yet paid or received an invoice for. Common examples include accrued wages, accrued interest, and accrued taxes. Under accrual accounting, these amounts must be recognized in the period they occur — not when cash changes hands — to match expenses to the revenue they help generate. They are classified as current liabilities on the balance sheet when due within one year and are reversed when payment is made.
Example
A company's December 31 balance sheet shows $2.5 million in accrued wages because employees earned salaries in the last two weeks of December that will not be paid until January. The company records a debit to wages expense and a credit to accrued liabilities to reflect the obligation at year-end, ensuring expenses are recognized in the correct accounting period.
Source: FASB — ASC 420 and ASC 835