Costs that flow directly to the income statement as expenses are called:
A)Period costs.
B)Product costs.
C)General costs.
D)Balance sheet costs.
E)Capitalized costs.

Question

Quizplus · Accepted Answer

Period costs are expenses that are incurred during a specific period, such as salaries, rent, and taxes, and flow directly to the income statement as expenses. Product costs, on the other hand, are costs associated with the production of goods and are capitalized as part of inventory until the product is sold. General costs and balance sheet costs are not commonly used terms in accounting, and capitalized costs refer to costs that are incurred to acquire or improve long-term assets and are recorded as assets on the balance sheet.

Costs That Flow Directly to the Income Statement as Expenses