Product costs are considered an asset until the finished goods are sold. Once the goods are sold, the costs are recognized as an expense in the income statement. Period costs, on the other hand, are expensed in the period they are incurred, such as selling and administrative expenses.

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Product Costs

Question 27

Multiple Choice

Product costs

A) are also called period costs.
B) are considered an asset until the finished goods are sold.
C) become an expense in the period the costs are incurred.
D) All of these answer choices are correct.

Correct Answer: