Mana Accounting Ch.1.2

Raw Materials

Any materials that go into the final product.

Finished Goods

Consists of completed units of product that have not yet been sold to customers.

Work in process

Consists of units of product that are only partially complete and will require further work before they are ready for sale to the customer

product costs (inventoriable costs)

Costs involved in making a product. ______ costs are expensed in the period in which the related goods are sold.

Product Costs for Financial Accounting

Include all costs involved in acquiring or making a product. ___________ attach to a unit of product as it is purchased or manufactured and they stay attached to each unit of product as long as it remains in inventory awaiting sale. When sold, their costs are released from inventory as expenses (cost of goods sold) and matched against sales on the income statement.

Matching

The accrual concept that costs incurred to generate a revenue are expensed in the same period the revenue is recognized is known as the _______ principle.

When are Period Costs expensed on the income statement?

________ costs are expensed in the period in which they are incurred.

Period Costs

all the costs that are not product costs. All selling and administrative expenses are treated as ____________. These kinds of costs do not flow through the inventory accounts on the balance sheet and they are not included in cost of goods sold in the income statement.

Product Costs (inventorial costs) for Manufacturing Companies

Include direct materials, direct labor, and manufacturing overhead. A manufacturer's ________ flows through thees three inventory accounts on the balance sheet

On a traditional income statement, cost of goods sold reports the _______ costs attached to merchandise sold during the period, while selling and administrative expenses report all _________ costs that have been expensed as incurred.

Product; Period

What 3 inventory accounts, found on the balance sheet, does a manufacturing company's product costs flow through?

Raw Materials, Work in Process, and Finished Goods.