Question

Sales commissions are not normally included in the cost of goods sold account.

A. True
B. False

Answer 1

Sales commissions are typically not included in the COGS but are recorded as operating expenses related to selling the product.

Step-by-step explanation:

The statement "Sales commissions are not normally included in the cost of goods sold account." is true. The cost of goods sold (COGS) is the direct cost attributable to the production of the goods sold by a company. This includes the cost of the materials and labor directly used to create the product.

Sales commissions, however, are considered to be operating expenses that are related to the selling of the product rather than the production of the product itself. Therefore, they are accounted for separately on the income statement.