Product costs and period costs receive similar treatment when presented in the financial statements.

Question

Quizplus · Accepted Answer

Product costs are recognized as inventory on the balance sheet and are later expensed through cost of goods sold in the period when the inventory is sold. Period costs, on the other hand, are expensed in the period in which they are incurred and are reported on the income statement as a separate line item, such as selling, general, and administrative expenses.

Product Costs and Period Costs Receive Similar Treatment When Presented