An accrued expense, also known as an accrued liability, is an accounting term that refers to an expense that is recognized on the books before it has been paid. It is a liability that reflects expenses that have not yet been paid or logged under accounts payable during an accounting period. Accrued expenses represent a companys obligation to make future cash payments, 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, wages, and payments owed to contractors and vendors. Accrued expenses can be an estimate and differ from the supplier’s invoice that will arrive at a later date. Expenses are recognized when they are incurred, not necessarily when they are paid, following the accrual method of accounting. At the end of each recording period, a company should properly estimate the dollar amount for each of its accrued expenses and then record it as an expense account with a corresponding payable/accrued expense liability. Accrued expenses are different from accounts payable, which are bills that have been received but not yet paid.