At the End of 2017, the Payroll Supervisor for Claro

question 15

Multiple Choice

At the end of 2017, the payroll supervisor for Claro, Inc. failed to accrue $24,790 in commissions for the outside salespersons. The cost was recorded in 2018 when the commissions were paid and Commission Expense was debited and Cash credited for the full amount. The error was not discovered until late in 2018 while reconciling year-end expenses for 2018. What is the proper treatment to correct the error? (Ignore income taxes.)

• A) Do nothing, the error has counterbalanced.
• B) Accrue $24,790 in Commission Expense for 2018.
• C) Debit 2018 beginning Retained Earnings and credit Commission Expense for $24,790.
• D) There is no error in either year because the commissions are recorded when paid.

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Definitions:

Pure Monopoly

A market structure where a single seller exclusively provides a product or service with no close substitutes, controlling the entire market supply.

Approximates

Nearly close or similar to something, indicating an estimation or a closely similar value to the actual.

Monopolistic Competition

A market structure characterized by many sellers offering products that are similar but not identical, allowing for some degree of market power.

Four-Firm Concentration

is a metric that measures the total market share held by the four largest firms within an industry, indicating the level of market concentration and competition.