What classification do accrued expenses fall under?

Accrued expenses fall under the classification of current liabilities because they represent obligations that a business has incurred but has not yet paid. These expenses arise when a company receives goods or services before payment is made, creating a liability on the balance sheet. Examples of accrued expenses include wages payable, interest payable, and taxes payable.

Since accrued expenses are expected to be settled within one year or the operating cycle of the business, they are classified as current liabilities. This reflects the company's short-term financial obligations that will need to be addressed in the near future, making it crucial for accurate financial reporting and assessment of the company’s liquidity. Understanding this classification helps in evaluating a company's financial health and ability to meet its short-term obligations.