Expense Accruals?

Question

I've always learned that you only accrue expense items at month end. However, there have been times when I was told that you can accrue for asset accounts as well like inventory, fixed assets, etc. Can someone please help clarify?

Answer 1

You can accrue for fixed assets that have been purchased, placed in service, but not yet paid for. For example the asset is in service, but cash has never left the company and an invoice has not been recieved. The entry would be

Fixed Assets Dr
A/P Cr

Thus you have accrued the fixed assets prior to actually paying for them. Similar entries can occur for inventory and even A/R under certain conditions.