Accrued Expenses

Accrued expenses are costs that have been incurred but not yet paid or recorded.

Explanation:
They are recorded through adjusting journal entries at the end of a period. Examples include unpaid salaries, taxes, or utility bills.

Example:
A company owes employees $5,000 in December wages, paid in January. The expense is accrued in December.

Importance:
Accurate accruals ensure expenses are matched to the correct period.

Common Confusion:
Accrued expenses are not the same as accounts payable, which involve received invoices.