Question

The costs to organize a new entity or costs to introduce a new product or services are considered __________ costs, and should be expensed as incurred?

1) capitalized
2) overhead allocation
3) research and development
4) start-up

Answer 1

Start-up costs are the expenses incurred in the initial phase of setting up a new business or launching a new product or service, and they should be expensed as they are incurred.

Step-by-step explanation:

The costs to organize a new entity or costs to introduce a new product or services are considered start-up costs, and should be expensed as incurred. Start-up costs are the expenses incurred in the initial phase of setting up a new business or launching a new product or service. These costs include expenses such as market research, product development, legal fees, and marketing expenses. Since these costs are incurred before the business or product generates any revenue, they are expensed as they are incurred rather than being capitalized.