What type of expenses are incurred but not yet paid by a firm?

Accrued expenses refer to costs that a company has incurred for services or goods that it has received but has not yet paid for. These expenses are recognized in the accounting period in which they occur, following the accrual basis of accounting, which emphasizes that financial transactions should be recorded when they are incurred rather than when cash is exchanged.

For example, if a company receives a utility bill for services consumed in one month but pays the bill the following month, the expense for that utility service is recorded in the month it was incurred, even though the payment hasn’t been made yet. This ensures a more accurate reflection of financial performance and condition during the reporting period.

In contrast, deferred income represents payment received before the service has been performed, while fixed costs are ongoing expenses that remain constant regardless of production levels. Outstanding debts are broader and encompass any amounts owed by the company, including loans and accounts payable, but do not specifically focus on expenses incurred but not yet paid.