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Accrued expenses are financial obligations that a company has incurred but not yet paid by the end of an accounting period. These expenses are recognized on the company’s balance sheet and income statement to reflect the true financial position and performance over the period. Examples include wages, interest, and utilities that have been incurred but not paid. Recording accrued expenses ensures that financial statements adhere to the matching principle, aligning expenses with the revenues they help generate, and providing a more accurate depiction of a company’s financial health.