Accrued expenses, also known as accrued liabilities, are expenses that a company has incurred but has not yet paid for. They are recognized on the books before they have been paid and are shown on a companys balance sheet as current liabilities since they represent a companys obligation to make future cash payments. Accrued expenses can be an estimate and differ from the suppliers invoice that will arrive at a later date.

Examples of accrued expenses include interest payments on loans, warranties on products or services received, taxes, rent, utilities, wages, and payments owed to contractors and vendors. Accrued expenses can be routine and recurring, such as wages payable, or infrequent or non-routine, such as a warranty on a product.

Accrued expenses are the opposite of prepaid expenses, which are expenses that a company has paid for in advance but has not yet used.

It is important for businesses to keep track of accrued expenses to ensure that they are paid promptly and to have a clear overview of what they owe and when the payments are due. Accounting software typically lets businesses create an accrued expenses account that will help them keep track of how much money they owe and when the payments are due. A spreadsheet or journal can also be used to list all accrued expenses.

In summary, accrued expenses are expenses that a company has incurred but has not yet paid for, and they are shown on a companys balance sheet as current liabilities. Examples of accrued expenses include interest payments on loans, warranties on products or services received, taxes, rent, utilities, wages, and payments owed to contractors and vendors. It is important for businesses to keep track of accrued expenses to ensure that they are paid promptly and to have a clear overview of what they owe and when the payments are due.