PRC-1 · Chapter 4 · Question 12 of 100
A company pays its sales agents a commission of 2% on total sales, which is payable in the month immediately following the sale. If total sales for December were Rs. 500,000, what is the accrued commission liability at 31 December?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 10,000
Explanation
The commission is earned by the agents in December but paid in January. Therefore, an accrual must be recorded for December. Rs. 500,000 x 2% = Rs. 10,000.
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