Are Form 1120 Schedule M 3 Incurred 2019-2024

Here is another example for us to look at. Imagine that a company used $2,000 worth of office supplies in the current year but did not pay any cash for them until the following year. The question is: how much of this expense should be included in the income statement for the current year? The answer is that the company should include the full expense of $2,000 as this is the value that was used in the year. However, the question now arises: since the company didn't actually pay for the office supplies in the current year, how do we record this second half of the transaction, which is the amount owed? The answer is that we record it as a current liability on the balance sheet. This amount is called an accrued expense. It is recorded as a current liability because we will have to pay the expense within the next year. So, in summary, accrued expenses are expenses that have been reflected on the income statement but have not yet been paid for. They will go on the balance sheet as an accrued expense.