Distinguish between Outstanding Expenses and Unexpired Expenses.

Outstanding Expenses:
Outstanding expenses refer to costs that have been incurred but not yet paid by the end of an accounting period. These are liabilities that the company owes to third parties, and although the services or goods have been received, the payment is delayed. Examples of outstanding expenses include unpaid wages, rent, or utility bills. In the financial statements, outstanding expenses are recorded on the liabilities side until they are settled in a subsequent period.

Unexpired Expenses:
Unexpired expenses, on the other hand, are prepaid expenses or costs that have been paid in advance but have not yet been consumed or utilized by the end of the accounting period. Common examples include prepaid insurance, prepaid rent, or prepaid subscriptions. These expenses are initially recorded as assets because the company has already made the payment but has yet to receive the full benefit. As time passes or the benefits are utilized, the prepaid expense is gradually recognized as an expense in the income statement.

In summary, the key distinction lies in the timing of the recognition – outstanding expenses are costs incurred but not yet paid, while unexpired expenses are costs that have been paid in advance but are yet to be consumed or utilized.