Product costs are capitalized as inventory on the balance sheet and period costs are expenses on the income statement.

Question

Quizplus · Accepted Answer

This statement is true. Product costs include direct materials, direct labor, and manufacturing overhead, and are added to inventory as assets on the balance sheet. Period costs, on the other hand, are expensed on the income statement in the period they are incurred, and include items such as selling, general, and administrative expenses.

Product Costs Are Capitalized as Inventory on the Balance Sheet