Which of the Following Statements Concerning Product and Period Costs

Which of the following statements concerning product and period costs is incorrect?

A) The basis of the distinction between product and period costs is the timing of the recognition of an expense in the income statement.
B) Service businesses have both period and product costs.
C) Product costs are included in the cost of inventories until the products are sold.
D) Period costs are not directly required to produce the product.