Deferred expenses are costs that a business has paid in advance but has not yet recognized as an expense on its financial statements. These expenses are recorded as assets until the benefits of the expense are realized over time. Common examples include insurance premiums and rent payments made in advance. When the time period for which the expense applies arrives, the business will then recognize the expense on its income statement. This process helps ensure that expenses are matched with the revenues they help generate, adhering to the matching principle in accounting.