Which of the following statements is true?
A)Product costs affect only the balance sheet.
B)Product costs affect only the income statement.
C)Period costs affect only the balance sheet.
D)Period costs affect both the balance sheet and the income statement.
E)Product costs eventually affect both the balance sheet and the income statement.

Question

Quizplus · Accepted Answer

Product costs are initially recorded in inventory on the balance sheet and are expensed on the income statement when the products are sold. Therefore, product costs eventually affect both the balance sheet and the income statement. Period costs, on the other hand, are expensed immediately and do not affect inventory on the balance sheet.

Which of the Following Statements Is True