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Accounting
Accrued Expenses
Expenses you have used up but haven't paid for yet at the end of the period.
Accrued expenses are recorded with an adjusting entry so the income statement shows all costs for the period. Common examples are wages, utilities, and interest.It's like eating at a restaurant and promising to pay the bill next week — you've already enjoyed the meal so you owe the money now.
Real world: Employees work the last week of December but get their paychecks in January, so the company records wages expense and a liability in December.
💡 Accrued expenses stop you from making your profits look bigger than they really are by hiding unpaid bills.