Unpaid or unrecorded charges are referred to as accrued expenses. An adjusting entry is one that reduces income and increases liabilities by recording an incurred expense.
An expense that is recorded on the books before it has been paid is referred to as an accumulated expense, also known as accrued liabilities. An estimated expense may not match the supplier's invoice, which will arrive at a later time. According to the accrual method of accounting, costs are recorded as incurred rather than as paid when they are actually incurred.
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