In terms of liabilities, what does 'accruals' refer to?

Accruals refer to expenses that have been recognized in the financial statements before the actual cash payment has been made. This concept is integral to the accrual accounting method, which records revenues and expenses when they are incurred rather than when cash is exchanged. In this context, an accrued expense represents a liability since it reflects the obligation to pay for goods or services that have already been received, even if payment has not yet occurred. This practice ensures that financial statements provide a more accurate picture of a company's current liabilities and financial position.

In contrast, funds already paid out represent cash outflows that have already settled current liabilities. Revenue deferred for future recognition addresses situations where payment has been received, but the income is not yet recognized in the current accounting period. Assets valued on the balance sheet pertain to resources owned by the organization but do not relate to the concept of accruals directly.