What are accrued expenses?

Accrued expenses are costs a business has incurred but has not yet paid. They are recorded as liabilities, so expenses are recognized in the period in which they occur.

Example: Employees earn wages in the final week of the month, but payroll is not processed until the following month. The wages are recorded as accrued expenses.

Related terms: Accrual Accounting, Liabilities, Payroll