Accruals

This code records amounts relating to accruals, expected to be settled within the next 12 months. As a liability account, it normally carries a credit balance: credit entries increase the balance (recording new amounts owed) and debit entries decrease it (recording payments made).

Real-world examples

Professional services

At its year end, an accountancy or law firm accrues for the statutory audit fee it knows it will be charged once the audit is complete, even though the auditor hasn't invoiced yet. A £4,500 estimated fee is a debit of £4,500 to the relevant overheads code and a credit of £4,500 to 2109 (Accruals). When the actual invoice arrives, the accrual is reversed and the real invoice processed normally through 2100, with any difference adjusted through the P&L.

Construction

A contractor accrues for subcontractor work completed on site by the period end but not yet invoiced — common because subcontractors often invoice a week or two later, sometimes tied to a formal valuation date. £8,000 of estimated labour is a debit of £8,000 to 6002 (Sub-Contractors) and a credit of £8,000 to 2109. VAT isn't accrued alongside it, because there's no VAT invoice yet to reclaim against — that's only recognised once the real invoice arrives.

Food and hospitality

A restaurant accrues for the last week or two of ingredient deliveries where the supplier's invoice hasn't arrived by the time the month is closed off — a routine, recurring accrual rather than a one-off estimate, since with weekly deliveries there's almost always an unbilled period at any cut-off date. £600 of estimated deliveries is a debit of £600 to 5000 (Materials Purchased) and a credit of £600 to 2109, reversed automatically once the real invoice is processed the following month.

Commonly confused with

Because code 2110 (Corporation Tax) sits right next to this one in Current Liabilities, it's a common mis-posting target. Code 2109 is specifically for accruals, while 2110 covers corporation tax — similar in nature, but keeping them separate is what makes the current liabilities section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

An error posting to Accruals misstates what the business owes, and for a Current Liabilities code specifically it can distort the working capital and current ratio that lenders and suppliers look at when assessing short-term financial health.

Other codes in Current Liabilities