Which of the following is the incorrect basis for recognizing the expense indicated?
A) Sales commissions expense on the basis of relationship with sales.
B) Administrative salaries expense recognized as incurred.
C) Amortization expense on the basis of time.
D) Cost of goods sold expense on a subjective or arbitrary basis.

Question

Quizplus · Accepted Answer

Cost of goods sold expense should be recognized based on an objective measure, such as the actual cost of the goods sold or a reasonable estimate of the cost based on historical data. Using a subjective or arbitrary basis could result in overstating or understating the expense, which would affect the accuracy of the financial statements.

Which of the Following Is the Incorrect Basis for Recognizing