An accrued expense is an expense that has been incurred during the accounting period but not yet paid.

It is recorded to follow the accrual principle, which states that expenses should be recognized when they arise, not when cash is paid.

Examples:

Salaries payable

Interest payable

Rent outstanding

Utility bills not yet paid

Accrued expenses are shown as current liabilities in the balance sheet.

In simple terms, an accrued expense is a cost the business owes but has not yet paid.