'Accrued Expenses' represent liabilities for expenses:

Accrued expenses represent liabilities for expenses that have already been incurred but have not yet been paid. This accounting concept highlights transactions where services or goods have been received, creating an obligation to pay that has not yet been fulfilled. For instance, if a company receives a utility service in December but does not pay for it until January, the expense is recognized in December—as it pertains to that accounting period—resulting in an accrued expense liability on the December balance sheet. This ensures that the financial statements reflect all incurred liabilities and expenses in the appropriate period, which is essential for accurate financial reporting and compliance with the accrual basis of accounting.

Other options refer to different scenarios related to expenses. Paying in advance represents prepaid expenses, which are recorded as assets until the service or benefit is consumed. Not yet incurred expenses do not create a liability until they are recognized in the accounting records. Anticipated expenses for future periods are not recognized as liabilities until they meet the criteria for accrual. Therefore, understanding the role of accrued expenses is crucial in accounting for managing and reporting financial obligations accurately.