In audits of companies in which payroll is a significant portion of inventory, the improper account classification of payroll can:
A) increase asset valuations.
B) decrease asset valuations.
C) either A or B
D) not affect asset valuations.

Question

Quizplus · Accepted Answer

Improper classification of payroll can either increase or decrease asset valuations depending on whether the payroll costs are over or under-allocated to inventory.

In Audits of Companies in Which Payroll Is a Significant