GAAP reporting rules require that all manufacturing costs be treated as:
A)period costs.
B)product costs.
C)value-added costs.
D)relevant costs.

Question

Quizplus · Accepted Answer

GAAP reporting rules require that all manufacturing costs be treated as product costs, which are costs that are directly related to the production of goods. Product costs include direct materials, direct labor, and manufacturing overhead. These costs are capitalized as inventory until the products are sold, at which point they become cost of goods sold. Period costs, on the other hand, are expensed in the period in which they are incurred and include items such as selling, general, and administrative expenses. Value-added costs and relevant costs are not specific categories of costs for financial reporting purposes.

GAAP Reporting Rules Require That All Manufacturing Costs Be Treated