Why Accrue for an Expense?
Accrual accounting is essential for providing an accurate financial picture of your business. By accruing expenses, you:
Match Expenses to Revenue: Ensures expenses are recorded in the same period as the revenues they help generate, giving a clearer view of profitability.
Improve Financial Accuracy: Reflects all incurred expenses, even if they haven’t been paid yet, preventing underreporting of liabilities.
Comply with Accounting Standards: Aligns with Generally Accepted Accounting Principles (GAAP) which require accrual accounting for accurate financial reporting.
How to Accrue for an Expense
Follow these steps to properly accrue for an expense:
Identify the Expense: Determine which expenses need to be accrued. These are typically expenses that have been incurred but not yet paid by the end of the accounting period (legal fees, salaries, utilities, etc).
Calculate the Accrual Amount: Estimate the amount of the expense. Use available invoices, past bills, or contracts to determine the most accurate amount.
Record the Journal Entry:
Debit the Expense Account: Increase the expense account for the amount of the accrued expense. This reflects that the expense has been incurred.
Credit the Accrued Liability Account: Increase the accrued liabilities account to recognize the obligation to pay the expense in the future.
How To Accrue an Expense in Puzzle
Puzzle supports a few ways to record accrued expenses, depending on how much automation you want:
1. Manual Journal Entry Best for one-off or unusual accruals.
Go to the Accounting page and select Manual Journal
Select Accrual basis reports from the dropdown
Input the posting date (usually end of the period)
Select an auto-reversing date (usually the beginning of the next period)
Debit the Expense Account and credit the Accrued Expense account
Post the entry
2. Accrual Dates on Transactions For recurring vendor expenses, you can set an accrual date directly on a transaction so Puzzle recognizes the expense in the correct period regardless of when it's paid — without a separate manual entry.
3. Accounting AI If you have Accounting AI enabled, you can ask it to:
Find missing recurring expense accruals — it reviews recent recurring expenses against your accrual ledger and proposes month-end accruals for vendors that look unbilled
Prepare accrual journal entries (Dr expense / Cr accrued expenses) with optional auto-reversal on the first of the next month
Post or update those entries once you confirm them
Review existing manual accrual entries to flag what's been accrued, reversed, duplicated, or is still sitting in accrued liabilities
Investigate accrual ledger activity by account, date, or vendor
Note on Prepaid Expenses: If you're scheduling accruals for an expense before it's been paid, that's handled through Prepaid Expenses rather than this workflow — see that article for how prepaid schedules interact with the accrued liability.
Tips for Accruing Expenses
Stay Organized: Keep a record of all accrued expenses and regularly review them to ensure accuracy.
Regular Reviews: Periodically review your accruals to ensure they reflect current obligations.
Automate Where You Can: Use Accrual Dates on transactions or Accounting AI (above) to catch recurring accruals automatically instead of relying solely on manual journal entries.
Accruing expenses helps maintain accurate financial records, ensuring your business reflects its true financial position at any given time.