Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following costs would be classified as a period cost?

Depreciation on manufacturing equipment

Direct materials used in production

Factory supervisor's salary

Sales commissions paid to sales staff

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Verified step by step guidance

Understand the concept of period costs: Period costs are expenses that are not directly tied to the production process. These costs are incurred over a specific period and are typically associated with selling, administrative, or general business operations rather than manufacturing.

Review the examples provided in the problem: Depreciation on manufacturing equipment, direct materials used in production, and factory supervisor's salary are all costs directly related to the manufacturing process. These are classified as product costs, not period costs.

Identify the correct classification for sales commissions: Sales commissions are expenses incurred as part of selling activities, which are not directly tied to production. Therefore, they are classified as period costs.

Distinguish between product costs and period costs: Product costs include direct materials, direct labor, and manufacturing overhead, all of which are tied to the production process. Period costs, on the other hand, include selling and administrative expenses, such as sales commissions.

Conclude that sales commissions paid to sales staff are classified as period costs because they are related to selling activities rather than the manufacturing process.