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This question is about employer.
What type of account is 'salaries expense'?
Salaries expense is an operating account that is typically classified as an administrative expense or a selling expense. Salaries expense is the fixed pay earned by employees. The expense represents the cost of non-hourly labor for a business. It is typically subdivided into accounts for individual departments, such as:
Salaries expense - accounting department
Salaries expense - production department
Salaries expense - human resources department
Salaries expense - technology department
Salaries expense - marketing department
Salaries expense - sales department
Salaries expense - legal department
The amount recorded as a salary expense may vary depending on the basis of accounting used. If the cash basis of accounting is used, only record an expense when a salary is paid to an employee; this can be inaccurate, especially when there is evidence of a liability to the employee in a prior period.
If the accrual basis of accounting is used, record an expense when the company incurs a liability for it, whether or not it is actually paid to the employee at that time. If a salary expense is related to production activities, it may be rolled into a production overhead account and then allocated to the cost of goods sold or inventory.
If a portion of overhead were to be charged to inventory, it will eventually be charged to the cost of goods sold, either when the goods are sold or declared obsolete. If salary expense is related to general, sales, or administrative activities, then it is charged to expense in the period incurred.
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