Asked by Jasmine Montero on Jul 04, 2024
Verified
Period costs include
A) current assets on the balance sheet
B) current liabilities on the balance sheet
C) operating costs that are shown on the income statement when products are sold
D) operating costs that are shown on the income statement in the period in which they are incurred
Period Costs
Expenses that are not directly tied to the production process and are instead charged to expenses as incurred, typically administrative or selling expenses.
Operating Costs
Expenses associated with the day-to-day functions of a business, excluding costs related to producing goods or services.
Income Statement
A financial statement that shows a company's revenues and expenses over a specified period, leading to its net income or loss.
- Differentiate among prime costs, conversion costs, and period costs.
Verified Answer
CJ
Cynthia Jones-WashingtonJul 07, 2024
Final Answer :
D
Explanation :
Period costs are expenses that are not directly related to the production of goods or services, but rather to the general operation of the business during a specific period of time. These costs include items such as office rent, salaries and wages of administrative personnel, and advertising expenses. Period costs are shown on the income statement in the period in which they are incurred, and are deducted from revenues to determine net income.
Learning Objectives
- Differentiate among prime costs, conversion costs, and period costs.