Multiple Choice
Under which type of accounting is the payment of a liability recorded when the cash is actually paid, rather than when the obligation is incurred?
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1. Introduction to Accounting
Types of Accounting
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Inventoriable costs is another term for which type of costs?
A
Selling costs
B
Administrative costs
C
Period costs
D
Product costs
Verified step by step guidance1
Understand the term 'Inventoriable costs': These are costs that are directly associated with the production of goods and are included in inventory valuation. They are capitalized as part of the cost of inventory until the goods are sold.
Recognize the types of costs provided in the options: Selling costs, Administrative costs, Period costs, and Product costs.
Clarify the definition of Product costs: These are costs that are directly tied to the production process, such as direct materials, direct labor, and manufacturing overhead. They are inventoriable because they are included in the cost of inventory.
Differentiate Product costs from other types of costs: Selling costs and Administrative costs are considered period costs, meaning they are expensed in the period incurred and are not inventoriable. Period costs are not tied to inventory production.
Conclude that 'Inventoriable costs' is another term for 'Product costs' because these costs are directly related to the production of goods and are included in inventory valuation until the goods are sold.
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