What is the best definition of actually incurred costs in accrual accounting?

Actually incurred costs in accrual accounting refer to the recognition of expenses at the moment the resources are consumed, rather than when the cash is actually exchanged. This emphasizes the matching principle, where expenses are recorded in the same period as the revenues they help to generate.

Understanding the timing aspect is critical here; it means that costs are recognized when they are incurred—regardless of when payment occurs. This approach provides a more accurate picture of a project's financial position by aligning expenses with the related revenue.

In this context, defining actually incurred costs solely as total expenses for the entire project period or projected costs does not capture the essence of accrual accounting, which is based on the timing of resource utilization. Moreover, while direct costs associated with human resources are indeed a part of incurred costs, they don't encompass the broader definition and timing aspect of expenses in overall accrual accounting practices. Hence, focusing on resource consumption and the related expense recording aligns perfectly with the principles of accrual accounting.