A is corrent because an accrued expense is an expense incurred but not paid. An example would be accrued payroll expense, which is incurred prior to year-end but not paid until the next period. Accruals (expenses and revenues) are transactions wherein expenses are incurred or the revenue earned prior to the period in which the expense is paid or the revenue received. In contrast to accruals are deferrals. Deferrals are transactions in which cash is received or cash is paid in a period prior to the earning of the revenue or the incurring of the expense (e.g., income received in advance and prepaid expenses).
B is incorrect because expenses that are not subject to reasonable estimates are not recorded or disclosed.
C is incorrect because when an expense is both incurred and paid, it is neither an accrual nor a deferral, and requires no adjustment.
D is incorrect because an expense paid but not incurred is a prepaid expense, not an accrued expense.
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