What are accrued expenses?

Accrued expenses refer to costs that a company has incurred during an accounting period but has not yet paid for by the end of that period. This concept is vital in the accrual basis of accounting, which matches expenses with the revenues they help generate, regardless of when the cash payment occurs.

When a company incurs expenses, it records these on its financial statements to reflect its financial performance accurately. Accrued expenses ensure that a company's liabilities are accurately reported, as they represent money that will be owed in the future based on current obligations. By recognizing these expenses in the period they are incurred, businesses comply with accounting principles, providing a clearer picture of their financial health.

The other options depict different financial concepts that do not align with the definition of accrued expenses, such as expenses that have already been paid, which pertain to cash expenses, future expenses which refer to expected obligations, and written off expenses which indicate items that are no longer considered recoverable.