Accrued expenses are defined as what?

Accrued expenses refer to costs that a company has incurred but has not yet paid as of the end of a fiscal period. This means that the expenses are recognized in the financial statements when they originate, even if the actual cash payment occurs later. This aligns with the accrual basis of accounting, which requires expenses to be matched with the revenues they help to generate, irrespective of when the cash payment is made.

For example, if a company receives services in December but does not pay for them until January, the expense must still be recorded in December's financial statements. This ensures that the financial results of a period reflect all costs associated with that period, thereby providing a more accurate picture of the company's financial performance.

The other choices would not accurately define accrued expenses. Future expenses that have not yet been incurred would not qualify as accrued. Unrecorded cash expenditures imply that transactions haven’t been captured in the accounting records, which is not the essence of accrued expenses. Lastly, fixed costs accounted in advance would typically pertain to prepaid expenses, which are recognized before they’ve been incurred, contrasting with the definition of accrued expenses.