Which of the following correctly describes the accounting for administrative expenses of a manufacturing company?
A) Administrative expenses are product costs and are expensed as incurred.
B) Administrative expenses are period costs and are expensed as incurred.
C) Administrative expenses are product costs and are expensed when the manufactured product is sold.
D) Administrative expenses are period costs and are expensed when the manufactured product is sold.

Question

Quizplus · Accepted Answer

Administrative expenses are not directly related to the production of goods and do not become a part of the cost of goods sold. Therefore, they are considered period costs and are expensed as incurred.

Which of the Following Correctly Describes the Accounting for Administrative