Question

Period costs would be reported on the income statement as expenses

A : as a part of cost of goods sold.
B : when the finished goods are sold.
C : when they are incurred.
D : at the beginning of the accounting period.

Answer 1

The correct answer is C

Step-by-step explanation:

Period cost is the cost which cannot be capitalized into the expenses of prepaid, fixed expenses or inventory. It is associated with the time instead of the transactional event.

It is charged to the expense in the period or year in which it is incurred. And this kind of cost is included in the selling ad administrative expenses section not in the Cost of goods sold (COGS) in the income statement.

For example- office rent, depreciation expense, commission, advertising expenses and selling expenses.