Accrued Expenses
Definition
Costs you have incurred in a period but have not been billed for or paid yet. Recording them puts the expense in the right month.
Want a deeper explanation?
Accruals are what separate a real monthly P&L from a checkbook. Without them, any cost billed in arrears, like freight, warehouse fees, payroll that straddles month-end or ad spend billed later, lands in the wrong month.
The accrual is reversed when the actual bill arrives, so nothing is counted twice. Watch for: P&L months that look great followed by months that look terrible, which often means late-billed costs are not being accrued.
Example
Your 3PL bills September's storage on October 10. At September month-end you record an estimated $4,800 accrual so September's P&L carries its real storage cost.