What type of expense is incurred in operating a business during an accounting period but not yet paid?

An accrued expense is a type of liability that reflects expenses that a company has incurred during a specific accounting period but has not yet paid. This concept is vital in accrual accounting, which emphasizes matching expenses to the revenues generated during the same period, regardless of when cash is exchanged.

When a business incurs an expense, it recognizes the obligation to pay for that expense in the period it occurs. This can include items such as wages owed to employees, utilities that have been consumed but not billed, or interest on loans. By recording these expenses as accrued, the company ensures that its financial statements provide a more accurate view of its financial health and operational performance during that accounting period.

Other choices represent different accounting concepts: deferred expenses refer to costs that have been paid in advance but are recognized as expenses in future periods; prepaid expenses are similar, being specifically payments made for future services or benefits; and operational expenses are broader, encompassing all costs of running the business without focusing on the timing of payments.