An Exception to the General Rule That Costs Should Be

question 72

Multiple Choice

An exception to the general rule that costs should be charged to expense in the period incurred is

• A)factory overhead costs incurred on a product manufactured but not sold during the current accounting period.
• B)interest costs for financing of inventories that are routinely manufactured in large quantities on a repetitive basis.
• C)general and administrative fixed costs incurred in connection with the purchase of
• D)sales commission and salary costs incurred in connection with the sale of inventory.

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Definitions:

Net Proceeds

The amount of money received from a transaction after deducting all associated costs and expenses.

Spread

The difference between two prices, rates, or yields, often referring to the bid-ask spread in securities.

Direct Costs

Expenses that can be directly tied to the production of specific goods or services, such as labor and materials.

Floatation Costs

The various costs associated with taking a company public, including legal, accounting, and marketing expenses, among others.