When recording accrued salary, what accounts are impacted?

When recording accrued salary, the transaction recognizes salaries that have been earned by employees but not yet paid by the end of the accounting period. This requirement aligns with the accrual basis of accounting, where expenses are recognized in the period in which they are incurred, regardless of when the actual cash payment occurs.

In this context, the correct approach is to credit the Salaries Payable account, which represents a liability owed to employees for the salaries they have accrued. This increases the obligation of the company to pay these salaries in the future. Simultaneously, the Salaries Expense account is debited, reflecting the cost incurred during the period for the work performed by employees. This debit increases the expense on the income statement, thereby accurately portraying the company's financial position and performance as it pertains to labor costs.

By crediting Salaries Payable and debiting Salaries Expense, the accounting entries appropriately record the obligation and the expense incurred, ensuring the financial statements reflect the company's liabilities and expenses correctly. This matching of expenses to the period in which they are recognized helps in providing a clear view of financial performance.