Accrued liabilities are non-supplier expenses that have been incurred, but not yet paid. Recall that accounts payable relate specifically to suppliers of merchandise or services.
Loans are accompanied by interest.
Any interest that has been incurred, but not yet paid is recorded as accrued interest payable.
Example: Accrued Interest Payable
Employees are paid in hourly wages, salaries, commissions, bonuses, stock compensation plans, and pensions.
When an employee has earned compensation, but has not yet been paid, a company must record accrued liabilities for these expenses.
Sometimes customers make refundable deposits or advances for products or services. Until the company has earned the revenue related to the deposit, a liability must be recorded.
Advances are also called deferred revenue or unearned revenue and represent prepayments from customers for products or services. Until the product has been delivered or the service performed revenue cannot be recorded and is instead recorded as a liability.
Gift cards as treated as customer advances and are recorded as deferred revenue in the same way as what is described above.Â
Companies sometimes make collections from customers or employees on the behalf of some third party. These collections are recorded as a liability.
The most common types of collection for a 3rd party are sales tax and payroll taxes.
These taxes represent liabilities until remitted.