Period costs are
A) always considered part of the inventory.
B) always recorded as an expense.
C) expensed only when the inventory is sold.
D) the same as indirect costs.

Question

Quizplus · Accepted Answer

Period costs are expenses that are not directly related to the production of goods, such as selling, distribution, and administrative expenses. They are not included in the inventory cost and are recorded as expenses in the period in which they are incurred. Therefore, option B is correct. Options A and C are inaccurate because period costs are not related to inventory and are not expensed only when the inventory is sold. Option D is incorrect because, although period costs are indirect expenses, not all indirect costs are period costs.

Period Costs Are