In governmental-type funds, salaries not paid at year-end are reported as expenditures along with the related liability.

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Items that, once incurred, normally are paid in a timely manner and in full from current financial resources-such as salaries or utilities-should be reported as expenditures of the current year. Such liabilities are considered as claims against current financial resources, and if not paid at year-end, expenditures are accrued and liabilities are reported in the governmental funds

In Governmental-Type Funds, Salaries Not Paid at Year-End Are Reported