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

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Which of the following is an example of a period cost in a company that manufactures clothing?

Direct materials used in production

Factory supervisor's salary

Sales office rent

Depreciation on manufacturing equipment

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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 non-manufacturing activities, such as selling, administrative, or general expenses.

Differentiate between product costs and period costs: Product costs include direct materials, direct labor, and manufacturing overhead, which are directly related to the production of goods. Period costs, on the other hand, are not part of the manufacturing process and are expensed in the period they are incurred.

Analyze each option provided: Direct materials used in production and depreciation on manufacturing equipment are product costs because they are directly tied to the production process. The factory supervisor's salary is also a product cost as it is part of manufacturing overhead.

Identify the correct example of a period cost: Sales office rent is a period cost because it is related to selling and administrative activities, not the production process.

Conclude that period costs are expensed in the period they occur and do not become part of the inventory value, unlike product costs which are capitalized until the goods are sold.