what are the expenses which are paid before getting goods and services are called?
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Explanation:
Paid expenses is your answer
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Answer:
What Are Incurred Expenses?
An incurred expense is a cost that your business owes when receiving goods or services. In business, the phrase "incurred expenses" typically refers to costs incurred that have not been paid. For example, if your business receives $10,000 worth of goods from a supplier who expects payment within the next month, the business has incurred a $10,000 expense. If a small-business owner uses his credit card to buy supplies for his company, the amount he puts on the credit card is an incurred expense because he has to pay it back at some point in the future.
What Are Paid Expenses?
Paid expenses are incurred expenses that you have paid for. For example, when you actually pay off the credit card used to buy supplies, the incurred expense becomes a paid expense. Oftentimes, expenses are paid almost immediately after incurring them.
For instance, when a business hires a contractor to do work for a day, it incurs an expense because the contractor expects payment for the services that he has performed. If the business gives the contractor cash for the services performed at the end of the day, the incurred expenses become a paid expense.
Accumulation of Incurred Expenses
Allowing too many incurred expenses to accumulate without paying them off can be dangerous because it may make it more difficult to do so. Businesses often take out loans to fund purchases, but loans do little more than delay payment of incurred expenses. If your company amasses too much debt and too many outstanding expenses, it might be unable to meet its obligations, which can lead to default.
Explanation:
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