Period costs are recognized in the period in which the costs are incurred and placed on the income statement as part of Cost of Goods Sold.

Question

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Period costs are expenses that are not directly related to the production of goods or services, but rather incurred during a specific period of time, such as selling and administrative expenses. These costs are recognized in the period they are incurred and are reported separately from Cost of Goods Sold on the income statement.

Period Costs Are Recognized in the Period in Which the Costs