Asked by Preanna Williams on May 26, 2024
Verified
A product cost is
A) expensed in the period in which it is manufactured
B) shown with current liabilities on the balance sheet
C) shown with operating expenses on the income statement
D) expensed in the period the product is sold
Product Cost
The total cost involved in manufacturing a product, including raw materials, labor, and overhead expenses.
Operating Expenses
Costs associated with the day-to-day operations of a business, such as salaries, utilities, and rent.
Income Statement
A report documenting a business's financial activities, including income, expenses, and net profit, for a particular period.
- Understand the relevance of product costs and period costs within financial statements.
Verified Answer
KK
kapil kaileyJun 01, 2024
Final Answer :
D
Explanation :
Product costs are expensed in the period the product is sold, as they are considered inventory until they are sold. This is known as cost of goods sold and is shown on the income statement. The other choices do not accurately reflect how product costs are accounted for.
Learning Objectives
- Understand the relevance of product costs and period costs within financial statements.