ACCT 207 Chapter 2 Video

Some period costs are immediately recorded on the income statement as expenses as incurred, while other period costs are capitalized as assets and are recorded on the income statement as depreciation expense as the asset is used up or generates revenue over time.

True

The Cost of Goods Manufactured equals the Total Manufacturing Cost for the Period plus the Beginning WIP (Work in Process Inventory) minus the Ending WIP.

True

The Cost of Goods Sold equals the Cost of Goods Manufactured plus the Beginning Finished Goods Inventory minus the Ending Finished Goods Inventory.

True

When providing cost estimates, it is essential to know the decision to which the cost object is related.

True

Product costs are recorded in inventory as an asset on the balance sheet and then are recorded on the income statement in the form of cost of goods sold as inventory is sold.

True

Assume at the beginning of this period, there was $45,000 worth of materials in Beginning Materials Inventory. $150,000 of raw material are purchased, and the Ending Materials Inventory contains $20,000 worth of materials. The Direct Materials Used in Production would be $125,000.

False

Cost objects do not need to be considered for all business and personal decisions.

False

The cost of goods manufactured represents the total product cost of goods completed during the current period and transferred to work in process inventory.

False

Cost of goods sold represents the cost of goods that were sold during the period and, therefore, transferred from finished goods inventory on the balance sheet to cost of goods sold on the income statement (i.e., as an inventory expense).

True

Direct Materials Used in Production equals Beginning Materials Inventory plus Purchases minus Ending Materials Inventory.

True