Expenditures relating to salaries are accounted for using the modified accrual basis of accounting. Proper accruals should be made at fiscal year end for the amount of salaries and related benefits earned by employees at year end and not paid. The other types of operating expenditures should be accounted for using the same basis of accounting and measurement focus. A liability is usually incurred when the goods or services are received, and necessary accruals should be made at year end. If purchases relate to inventory or supplies items, refer to the Inventory section of this module.
Capital expenditures relate to acquisition of general fixed assets.
Such expenditures are recorded in the General Fund, Special Revenue Funds or Capital Projects Funds depending on the source of funds. Purchases of personal property, such as furniture and equipment are usually recorded as expenditures in the General Fund if they are financed from operating budgets or special revenue funds if they are financed from grants. Major projects such as the building of a school building financed by the proceeds of bond issues are often accounted for in a Capital Projects Fund. Cost associated with acquisition of fixed assets in governmental funds are recorded as current expenditures when the liability is incurred, usually upon receipt of the related asset. Fixed assets could be acquired through capital leases.