Accrued expenses refer to what type of obligation?

Accrued expenses represent obligations incurred by a business for costs that have been incurred but not yet paid or recorded in the accounts. This financial concept refers specifically to money owed to external parties for expenses that have been recognized in the accounting period but for which cash has not yet been disbursed.

For example, if a company has received services such as utilities or labor during a month but has not yet paid the invoice, it would record this amount as an accrued expense. The expense is recognized in the income statement during the relevant accounting period to match expenses with revenues, adhering to the accrual basis of accounting. This ensures that the financial statements present a more accurate picture of the company's financial performance and obligations.

In contrast, the other options describe different financial transactions or obligations that do not align with the definition of accrued expenses. Money owed for services yet to be provided pertains to unearned revenue, money paid for goods received reflects an already settled transaction, and income earned but not yet received relates to accrued income, which is distinctly different from accrued expenses.