Accrued liability: you know some costs may happen in current month. But, you are not sure about the real amounts since you don’t have invoices yet. Then, you use accrual liability to accrue these costs. In the month end reporting mind, we need use a schedule to track accrual liability amounts for the whole year. Journal Entry: Dr Estimated cost CR accrued liability. (Reversal normally)
Accrued expense: you have invoices which belong to current month. So, these invoices are real costs which are not paid in time in current month. You have to accrue these costs in current period to reflect the accurate financial information for timing purpose. You use accrued expense. Journal Entry: Dr Accrued expense CR accounts payable. (Reversal normally)
Accrued expense: you have invoices which belong to current month. So, these invoices are real costs which are not paid in time in current month. You have to accrue these costs in current period to reflect the accurate financial information for timing purpose. You use accrued expense. Journal Entry: Dr Accrued expense CR accounts payable. (Reversal normally)