An expense becomes an accrual because it has been incurred in a period, but the payment for it has not yet been made. In other words, it is an expense that has been recognized but not yet paid. Accrued expenses are recognized in the period in which they occur, regardless of when they are paid. This is important because it allows financial statements to show a more accurate picture of a company's financial position by recognizing all expenses that have been incurred, even if they have not yet been paid. Therefore, 2, 3, 4, and 5 are not correct because they do not fully capture the concept of accruals.