In this article we will provide the information related to the Journal Entries for Outstanding Expenses. The journal entries for outstanding expenses remain consistent with those explained for accrued expenses.

The distinction primarily lies in the nomenclature, with Indian accountants referring to them as outstanding expenses, while the term accrued expenses is more prevalent in the USA.

Let’s delve into this concept once more for the benefit of Indian students. Outstanding expenses are those obligations that are due but remain unpaid.

When preparing financial statements, it is imperative to make an adjustment journal entry for these expenses.


The entry for outstanding expenses stands as follows:


 Debit the Expenses Account.

 Credit the Outstanding Expenses Account.


For instance, let’s consider a scenario where Ram has taken a loan of Rs. 10,000 with an annual interest rate of 10%. Suppose he took the loan on 1st April 2023, paid Rs. 1,000 in interest on 15th May 2024, and closed his account on 31st March 2024.

At that time, there would be an outstanding interest of Rs. 1,000, which is payable but not yet paid. On 31st March 2023, the following journal entry would be passed:


On 31st March 2024:


 Interest Account Debit 1,000

 Outstanding Interest Expense Account Credit 1,000




In the profit and loss account:


We will display the outstanding expense account on the debit side of the profit and loss account and also in the current liability section of the balance sheet.


On the date of payment, 15th May 2024:


 Outstanding Interest Expense Account Debit 1,000

 Bank Account Credit 1,000


Advantages of Passing Journal Entry for Outstanding Expenses:


  1. By recording the journal entry for outstanding expenses and including them on the debit side of the profit and loss account, we accurately account for these expenses when calculating net profit or net loss. This ensures that our financial statements reflect the true financial performance of the business.


  1. Passing the journal entry for outstanding expenses helps us accurately represent our liabilities. After making this entry, we can present our precise financial position at the end of the financial period.


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