What effect does the improper account classification of payroll have when payroll is a significant portion of inventory?
A) increase asset valuations
B) decrease asset valuations
C) either A or B
D) not affect asset valuations

Question

Quizplus · Accepted Answer

Improper account classification of payroll, when payroll is a significant portion of inventory, can either increase or decrease asset valuations depending on whether the payroll costs are incorrectly capitalized (increasing assets) or expensed (decreasing assets).

What Effect Does the Improper Account Classification of Payroll Have