What is typically recorded to adjust for accrued expenses?

When adjusting for accrued expenses, the key focus is on recognizing expenses that have been incurred but not yet paid. This means that the company has utilized goods or services in the current accounting period, but the payment for those expenses will occur in a future period. Recording this adjustment ensures that the expenses are matched with the revenues they helped generate, adhering to the accrual basis of accounting. This practice not only reflects a more accurate view of the company’s financial position but also complies with the matching principle, which is fundamental in accounting.

Other options refer to different accounting principles or types of transactions. For instance, deposits received from customers are liabilities since they represent future obligations to deliver goods or services. The estimated cost of future commitments does not reflect expenses that have already occurred, and assets purchased in advance relate to prepaid expenses, which are recorded differently altogether. Thus, focusing on the correct adjustment for accrued expenses highlights the importance of recognizing incurred costs to maintain accurate financial reporting.