The First Type of Expense Is a Product Cost

question 80

Short Answer

The first type of expense is a product cost.These costs can be directly matched to specific transactions or events and are recognized upon recognition of revenue.
2.The second type of expense is a period cost.These are expenses recognized during the period in which cash is spent or liabilities are incurred for goods and services to be used up within a short amount of time.
3.The last type of expense includes those that are allocated systematically and rationally to the period during which the related assets are expected to provide benefits.

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Definitions:

Contractual Rights

Legal entitlements embedded within a contract that dictate what each party to the agreement may or may not do.

Consideration

The benefit, interest, or value that induces a party to enter into a contract.

Revoking Assignment

The act of withdrawing or cancelling a task, duty, or responsibility that has been assigned to someone.

UCC

The Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States.