Explore commonly used personal finance terms.
Accrued expenses are costs that have been incurred but not yet paid, commonly recorded as a liability on the balance sheet. Examples include interest payments, wages, and utility bills. Accrued expenses help companies accurately reflect their liabilities and expenses in financial reports, as they recognize costs when they occur rather than when cash is exchanged. This accounting method, known as accrual accounting, provides a more accurate picture of a company’s financial health and cash flow.
