Which of the following describes accrued expenses?

Accrued expenses refer to costs that a business has incurred for which payment has not yet been made. This concept is a key part of accrual accounting, where expenses are recognized when they are incurred, rather than when the cash is actually paid out. This means that even though the actual cash payment has not occurred, the company must still account for these expenses in its financial statements.

For instance, if a company receives a utility bill for services used in September but does not pay it until October, that expense is recognized in September as an accrued expense. This ensures that the company's financial records accurately reflect the expenses that correspond to the period in which they occurred, providing a clearer picture of financial performance and obligations at any given time.