Which of the Following Correctly Describes the Accounting for Advertising

question 58

Multiple Choice

Which of the following correctly describes the accounting for advertising costs?

• A) Advertising costs are product costs and are expensed as incurred.
• B) Advertising costs are period costs and are expensed as incurred.
• C) Advertising costs are product costs and are expensed when the manufactured product is sold.
• D) Advertising costs are period costs and are expensed when the manufactured product is sold.

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Definitions:

Sole Proprietorship

A business structure where a single individual owns and runs the business, responsible for all its debts and liabilities.

Debt Financing

Borrowing money that must be repaid over time, with interest.

Collateral

is an asset pledged as security for the repayment of a loan, forfeitable in the case of default.

Corporation

A legal entity recognized by law as a separate "person" that can own assets, incur liabilities, and conduct business, often with the aim of generating profit for its shareholders.