For inventoriable costs to become expenses under the matching principle

Question

Quizplus · Accepted Answer

Inventoriable costs (also known as product costs) are costs associated with creating a product, such as direct materials, direct labor, and manufacturing overhead. These costs are initially recorded as inventory on the balance sheet and become expenses when the finished product to which they attach is sold. This is in accordance with the matching principle, which states that expenses should be recognized in the same period as the corresponding revenue is earned. Therefore, option C is correct - the product to which they attach must be sold for inventoriable costs to become expenses. Options A, B, and D are incorrect because they do not accurately describe when inventoriable costs become expenses.

For Inventoriable Costs to Become Expenses Under the Matching Principle