Expenses incurred but not yet paid are classified as a "current liability". A current liability is a financial obligation that a company owes to another party, and it is expected to be settled within the next 12 months. When a company incurs expenses but has not yet paid for them, they are recorded as a current liability on the balance sheet. These liabilities are usually settled in the near future with cash, and examples include accounts payable, accrued expenses, and taxes payable.