When preparing financial statements under generally accepted accounting principles, support department costs are generally classified as:
A) Product costs
B) Period costs
C) Nonoperating costs
D) Variable costs

Question

Quizplus · Accepted Answer

Support department costs, also known as indirect costs, are not directly related to generating revenue and are incurred to support the primary business functions. Hence, they are classified as period costs under generally accepted accounting principles. Product costs refer to direct costs incurred in producing goods or services, while nonoperating costs refer to expenses not related to the primary operations of the business. Variable costs refer to costs that vary with the level of production or sales.

When Preparing Financial Statements Under Generally Accepted Accounting Principles, Support