---
title: "The search for unrecorded liabilities"
description: "Four October bills sorted by when the cost was incurred: $2,490 accrued to September, one passed under the floor, one left for October."
canonical: "https://lopifi.com/learn/vendor-statements-and-ap-tie-out/unrecorded-liabilities-search"
---

# The search for unrecorded liabilities

> Four October bills sorted by when the cost was incurred: $2,490 accrued to September, one passed under the floor, one left for October.

Source: https://lopifi.com/learn/vendor-statements-and-ap-tie-out/unrecorded-liabilities-search
Part of: Lopifi — Planned: US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

---

**How do you find bills that belong in last month and accrue them at month end?** Four October bills sorted by when the cost was incurred: $2,490 accrued to September, one passed under the floor, one left for October.

A bill that arrives after month end can still belong to last month. The [search for unrecorded liabilities](https://lopifi.com/md/glossary/unrecorded-liabilities-search) reads the bills and payments entered in the first weeks of the next month and asks of each one: when did the goods or the service arrive? Not the date on the bill, and not the date it is paid. This is [cut-off](https://lopifi.com/md/glossary/cutoff) again, and it is the same search an auditor runs.

| Bill | Vendor | Received or performed | Billed | Amount | Accrued | Treatment |
| --- | --- | --- | --- | --- | --- | --- |
| OCT-6 | Power utility | September 30, 2026 | October 9, 2026 | 472.80 | 450 | Pass |
| DV-3340 | Drill vendor | September 29, 2026 | September 29, 2026 | 1,850 | 0 | Accrue in September |
| PK-2210 | Packaging supplier | September 28, 2026 | October 3, 2026 | 640 | 0 | Accrue in September |
| TR-0412 | Training provider | October 12, 2026 | September 30, 2026 | 900 | 0 | October's cost |

Four bills that reached Northwind in October, sorted at September 30. Northwind accrues anything unrecorded of $100 or more.

Three outcomes. The freight and the packaging were received before the 30th and are not accrued, so they are September's cost: $2,490 together. The power bill is for September too, but $450 of its $472.80 is already accrued, and the $22.80 left is under the floor, so October's true-up takes it, as it did in the earlier lesson. The training is for October; a bill dated September 30 does not move the cost back. If Northwind had paid it early, it would sit as a prepaid, not an expense.

> “Accrual accounting attempts to record the financial effects on an entity of transactions and other events and circumstances that have cash consequences for the entity in the periods in which those transactions, events, and circumstances occur rather than only in the periods in which cash is received or paid by the entity.”

© Financial Accounting Foundation. All rights reserved.

— [CON 8, Introduction — as amended by Ch. 4, App. A (carrying forward CON 6, ¶139)](https://www.fasb.org/concepts-statements), What accrual accounting is for

**Scenario — A bill dated in October for September's cartons.** On October 3, 2026 the packaging supplier's bill for $640 arrives for cartons delivered on September 28, 2026. The bill is dated in October, so it would land in October's expenses. The delivery date puts it in September, and September's books are not locked yet, so it is accrued, then reversed on October 1, then booked as an ordinary bill.

1. **Set the window.** Pick the window: bills and payments entered after the period end, through the day the close finishes. At year end, look further.
2. **Date the cost, not the bill.** List each bill and each payment, with the date the goods arrived or the service was done. Ask the person who ordered it if the bill does not say.
3. **Sort by period.** After the period end: next period. On or before: it belongs in this one. Subtract anything already accrued.
4. **Accrue and note.** Anything unrecorded at or above the floor is accrued. Record what you passed on, and why.
5. **Reverse.** Reverse the accruals on the first day of the next month and book the bills normally.

The search.

> **Tip.** **Look at payments as well as bills.** A check written in the first weeks of the new month to a vendor with no bill in the old one is a strong clue. **Ask the budget owners** what they received last month that has not been billed. A short email beats a long search. **Write the floor down** and apply it the same way every month, so the passed items are a policy, not a judgment made at midnight.

> **Mistake.** Going by the bill date. A bill dated September 30 for October's training is not a September cost, and a bill dated October 3 for September's freight is. The date that decides the period is the date the goods arrived or the service was performed.

**Exercise — Find September's unrecorded liabilities.** Four bills that reached Northwind in October. Decide which belong to September's books at September 30. Northwind accrues anything that was received by the 30th and is not yet accrued, if the unrecorded part is 100.00 or more. Enter the amount to accrue, or leave it blank. Type it in the workbook at https://lopifi.com/playground.

## Where this page's rules come from

- [CON 8, Introduction — as amended by Ch. 4, App. A (carrying forward CON 6, ¶139)](https://www.fasb.org/concepts-statements) — What accrual accounting is for (concepts)
- [ASC 405](https://asc.fasb.org/405/tableOfContent) — Liabilities (codification)
- [ASC 105-10-05-6](https://asc.fasb.org/105/tableOfContent) — Immaterial items — why a capitalization threshold is allowed at all (codification)

## Read further

- https://lopifi.com/md/journal-entries/accrued-expenses
- https://lopifi.com/md/startups/accrued-expenses-vs-accounts-payable
- https://lopifi.com/md/accounting/cutoff
- https://lopifi.com/md/accounting/accrued-expenses
- https://lopifi.com/md/docs/domain/schedules-and-accruals
- https://lopifi.com/md/docs/domain/periods-and-close

- **Track:** [Accounts payable](https://lopifi.com/md/learn/ap)
- **Part of:** [Vendor statements and the payables tie-out](https://lopifi.com/md/learn/vendor-statements-and-ap-tie-out) — 8 min
- **Terms taught:** [Cutoff](https://lopifi.com/md/glossary/cutoff), [Accrual](https://lopifi.com/md/glossary/accrual), [Accrued liability](https://lopifi.com/md/glossary/accrued-liability), [Reversing entry](https://lopifi.com/md/glossary/reversing-entry), [True-up](https://lopifi.com/md/glossary/true-up), [Materiality](https://lopifi.com/md/glossary/materiality), [Unrecorded liabilities search](https://lopifi.com/md/glossary/unrecorded-liabilities-search)
- **Previous:** [Vendor statements and the payables tie-out](https://lopifi.com/md/learn/vendor-statements-and-ap-tie-out)
- **Next:** [Prepaid, expensed or capitalized: what a bill buys, AP · Lesson 12](https://lopifi.com/md/learn/prepaid-expensed-or-capitalized-bills)
- **The course:** https://lopifi.com/md/learn