Management Fees Accrual Journal Entry

Management Fees Accrual Definition And Meaning In Accounting

Management Fees Accrued or Payable is a Current Liability for the company to pay to the person who manages the business of the company against the services rendered  to the company / corporation during the month. It has been incurred by the company and recorded in the Books of Accounts but still the payment is not paid to the management. It is an example of Accrued Expenses or Outstanding Expenses or Accrued Liabilities.

The Adjusting Journal Entry is made at the end of the month according to Accrual Basis of Accounting:

          Management Fees Account  XXX

 

                                                       Management Fees Payable Account  XXX

(Management Fees Payable For the Month)

Management Fees is an Expense for the company to pay to the managing person for the current accounting period but if it is not paid, then it is called expenses payable or accrued expenses as the company is liable to pay to the Management for the services received by it. While it is a Revenue for the person who earns it by delivering services against the agreed fees.

When the company actually pays the Management fees on the next month (Let’s Say), then the Journal Entry to pay Management Fees for Cash during the accounting period is shown below:

                      Management Fees Account  XXX

                                                                  Cash Account  XXX

(Management Fees Paid)