For product costs associated with a particular product to be expensed on the income statement:
A) The product must be transferred to Finished Goods Inventory.
B) The product must still be in Goods In Process Inventory.
C) The product must be sold.
D) The product may be in any of the manufacturer's inventory accounts.
E) The company must expect to sell the product during the next twelve months.

Question

Quizplus · Accepted Answer

Product costs are expensed on the income statement when the product is sold. This means that the product must be transferred to Finished Goods Inventory and then sold before its associated costs are expensed. Therefore, choice A and B are incorrect. The product may be in any of the manufacturer's inventory accounts including Finished Goods Inventory, Goods In Process Inventory, or Raw Materials Inventory, making choice D incorrect. The timeframe for selling the product is not relevant to expensing its costs, making choice E incorrect.

For Product Costs Associated with a Particular Product to Be