ACC 410 Chapter 5: Chapter 5
Document Summary
product costs: are costs involved in either making or purchasing a product, and they are called manufacturing or inventoriable costs. costs are accumulated on balance sheet as inventory until sale occurs. period costs: are the operating costs that are not part of making or purchasing a product, such as sales and administrative expenses costs are expensed as incurred. service companies provide services or intangible products and thus do not incur product costs and do not have inventory. merchandising companies purchase merchandise for resale as a part of their business operations. They incur merchandise costs, and they may have leftover inventory (if all the merchandise purchased during the period was not sold by the end of the accounting period. manufacturing companies purchase raw materials and components and process them and make them into finished goods.