Herb Company manufactured more product than it was able to sell during the current year.If the salaries of the sales staff of Herb Company are improperly recorded as a product cost,what will be the likely effect on net income of the period in which the error occurs?

Question

Quizplus · Accepted Answer

Recording salaries of sales staff as a product cost means that it will be included in the cost of goods sold. This will increase the cost of goods sold and decrease gross profit, resulting in an overstated net income.

Herb Company Manufactured More Product Than It Was Able to Sell