The payroll accrual is the amount that needs to be entered into a liability account in order for the credit balance in the liability account to be the amount owed to employees. The amount owed is the amount the employees have earned from working, but as of the date of the balance sheet this amount has not been paid to the employees.

To illustrate the payroll accrual, assume that a company's employees were paid on September 30 for their work through September 25. The credit balance needed in the liability account as of September 30 is the amount that the employees earned for the days of September 26 through September 30.