Outstanding Expense
In the world of business, payments are not necessarily paid or received when due.
An Outstanding Expense is an expense which is due but has not been paid.
An expense becomes outstanding when the company has taken the benefit, but the related payment has not been made.
Examples of Outstanding Expenses
Outstanding expenses appear within the Current Liability section of the Balance Sheet.
What is the difference between an Outstanding Expense and Accrued Expense?
Some people use the term Outstanding Expense and Accrued Expense interchangeably.
While both are similar, they are not quite the same.
While both these types of expenses have been incurred, the difference arises in when the payment is due.
An accrued expense indicates that an expense has been incurred but is NOT YET DUE for payment.
An outstanding expense indicates that an expense has been incurred and is PAST DUE for payment.
Journal Entry of an Outstanding Expense
Date | Description | Amount | |
|---|---|---|---|
MM/DD/YY | Expense A/c | Debit | $A |
MM/DD/YY | Outstanding Expense A/c | Credit | $A |
As an example, let's say that on Dec 31, 2020, the salary outstanding for staff is $25,000.
The Journal Entry for the above transaction would look something like this.
Date | Description | ||
|---|---|---|---|
12/31/2020 | Expense A/c | Debit | $25,000 |
12/31/2020 | Outstanding Expense A/c | Credit | $25,000 |
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