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Accrued Liabilities

Department:

Finance

Accrued Liabilities

$

Calculation

Accrued Liabilities = Sum of all incurred expenses not yet paid by the end of the accounting period

DESCRIPTION

Accrued Liabilities represent the recorded obligations of a company that have been incurred but not yet paid. This includes expenses like wages, taxes, interest, and utilities that have been recognized in the accounting period they are incurred, regardless of when the payment is made.

Purpose

The primary purpose of Accrued Liabilities is to acknowledge all expenses that a company has incurred during a financial period, ensuring that the company's financial statements reflect all costs of operations accurately, even if these costs have not been paid by the end of the accounting period.

Interpretation

Did you get it right

Optimal:
Indicates that the company is recognizing its expenses in a timely fashion, which contributes to an accurate representation of its financial position.
Alert:
May suggest that the company has a significant number of obligations due in the short term, which could impact cash flow and liquidity, unless Working Capital is a strong positive number.
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06/15/2024 04:05:04 am