Which of the following costs are linked to the revenues earned during a period?
A)Product costs
B)Period costs
C)Both product and period costs
D)Neither product nor period costs
E)Product costs as long as the goods remain in inventory

Question

Quizplus · Accepted Answer

Product costs are directly linked to the revenues earned during a period because they include all costs involved in acquiring or making a product. When the product is sold, these costs are matched with the revenues generated from the sale, reflecting the cause-and-effect relationship between the costs incurred to produce the goods and the revenues earned from selling those goods. Period costs, on the other hand, are more associated with time periods rather than with specific products, and are expensed in the period they are incurred, regardless of sales activities.

Which of the Following Costs Are Linked to the Revenues