Outstanding expenses refer to the expenses that have been incurred by a business but have not yet been paid for. These are also known as unpaid expenses or accrued expenses. They are recorded in the company’s financial statements as accounts payable or accrued liabilities.
Examples of outstanding expenses include bills from suppliers for goods or services that have been received but not yet paid, salaries or wages that have been earned by employees but not yet paid, rent that has been incurred but not yet paid, and utilities that have been used but not yet paid. These expenses are typically recorded in a liability account and are subtracted from the company’s assets to arrive at the correct net income figure in the financial statement.
Outstanding expenses are important to track as they represent obligations that a business has to pay in future and they can impact the liquidity of the company. These expenses may also come with a late fee or interest when they are not paid on time.
