Accrued Expense
Definition
An accrued expense is a cost the business has incurred but has not yet paid or recorded. At period-end, the bookkeeper records it so the books reflect what is actually owed.
Example
Wages earned by employees in the last week of March but paid in April are an accrued expense. The bookkeeper records the March wage expense and a matching liability.
Why It Matters
Without recording accrued expenses, the period's profit looks too high and liabilities are understated.