Which of the following statements is true of the flow of product and period costs for a manufacturer?
A) When the manufacturing process is completed, the costs are transferred to the Work-in-Process Inventory account.
B) The cost of the finished goods that the manufacturer sells becomes its Cost of Goods Sold on the income statement.
C) Period costs remain in inventory accounts on the balance sheet until the product is sold.
D) All product costs that have been paid are expensed and reported on the income statement at the end of the accounting period.

Question

Quizplus · Accepted Answer

Period costs are expensed in the period in which they are incurred and are not included in the cost of the manufactured product. The cost of goods sold represents the cost of the finished goods that the manufacturer sells and is reported on the income statement as an expense. Work-in-Process Inventory and Finished Goods Inventory accounts hold the product costs until the product is completed and sold, respectively. All product costs are included in the cost of goods sold and are expensed when the product is sold.

Which of the Following Statements Is True of the Flow