At the end of an accounting period, some expenses have been incurred but not yet recorded by the normal transaction process, these expenses are liabilities and need to be accrued.
So for example if rent for the year was 12,000, at the end of month 1, 12000/12 = 10000 would need to be accrued in the accounts
DR: Rent expense 1000
CR: Accrued expenses 1000
if rent for the year was 12,000, at the end of month 1, 12000/12 = 10000 would need to be accrued in the accounts
if you use the accrual method of accounting, when you get an invoice for a bill, you debit the expense and credit accounts payable – then when you pay the bill,, you debit accts payable and credit cash.
if you use the cash method of accounting, you don;t debit the expense until you actually pay the bill
The total amount of your expenses.