GAAP requires companies to treat product costs such as factory overhead as an asset until the product is sold.

Name: GAAP requires companies to treat product costs such as factory overhead as an asset until the product is sold.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

According to GAAP, product costs such as factory overhead should be treated as inventory (an asset) until the product is sold. Once the product is sold, the costs are then recognized as cost of goods sold (an expense).

GAAP Requires Companies to Treat Product Costs Such as Factory