Which of the following sentences is true of classification of spoilage as normal or abnormal when inventories are present?
A) Classifying spoilage as normal rather than abnormal results in same current operating income.
B) Classifying spoilage as normal rather than abnormal results in an decrease in current operating income.
C) Classifying spoilage as abnormal rather than normal results in an increase in current operating income.
D) Classifying spoilage as normal rather than abnormal results in an increase in current operating income.

Question

Quizplus · Accepted Answer

Classifying spoilage as normal rather than abnormal results in an increase in current operating income because normal spoilage costs are included in the cost of goods sold, reducing expenses and increasing income.

Which of the Following Sentences Is True of Classification of Spoilage