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Publish On: 2018-12-09

Peter

Total Post: 504

Question: What are accrued expenses

Reply On: 2013-09-03

Priancka

Total Post: 8

ANS: What are accrued expenses

In addition to trade credit, accrued expenses and deferred income are other spontaneous sources of short-term financing. Accrued expenses are more automatic source since, by definition; they permit the firm to receive services before paying for them.

Accrued expenses represent a liability that a firm has to pay for the services which it has already received. Thus they represent a spontaneous, interest-free source of financing. The most important component of accruals is wages and salaries, taxes and interest.

 

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