Fundamental Glossary / Financial Statements
Accrued Expenses
Costs that have been incurred but not yet paid or invoiced, recognised as a liability.
Formula
Expense in the P&L and a current liability on the balance sheet, until cash is paid.
What it means
Accrual accounting records the electricity, wages, or interest of this period even if the cash leaves next period. Accrued expenses are that timing difference.
They are part of working capital. A rise in accruals boosts operating cash flow this period, because profit was charged and cash was not.
How to read it
Smooth, modest accruals are normal. A sharp rise relative to sales can be conservative provisioning, or it can be a delay in payment that flatters cash flow.
What to watch
If the accrual is later reversed because the cost never came, last period's profit was too low and this period's is too high. Watch reversals.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.