Costs that are first assigned to inventory are called:
A) Period costs.
B) Product costs.
C) General costs.
D) Administrative costs.
E) Fixed costs.

Question

Quizplus · Accepted Answer

Product costs refer to costs that are directly associated with the production or acquisition of a product or inventory. These costs are assigned to inventory until the product is sold, at which point they are recognized as cost of goods sold. Period costs, on the other hand, are expensed in the period incurred and do not relate to inventory or production. General costs, administrative costs, and fixed costs may or may not be related to inventory or production, but they are not the first costs assigned to inventory.

Costs That Are First Assigned to Inventory Are Called