Management Fees Expense Journal Entry

Management Fees Expense is an Operating Expense for the company and it is paid to management company against the services received by it from managers or directors of the management company on the behalf of owners / shareholders of the company.

When it is incurred, the following Journal Entry would be passed in the Book or Journal of the company as shown below:

                         Management Fees Expense a/c  XXX

                                                                           Cash a/c  XXX

                            (Paid Management To Management Of the Company For The Month)

Sometimes, the company accrued the management fees called Accrual Management Fees, as it is not paid to managers in time, so according to Accrual Basis of Accounting, we pass the following Adjusting Entry at the end of the accounting period:

                         Management Fees Expense a/c  XXX

                                                                           Management Fees Accrued a/c  XXX

                                                   (Management Fees Accrued For The Month)

When it is actually paid by the company to the management company, then the above adjusting entry would be reversed by passing Reversing Entry.