1. Which of the following statements about costs and expenses is correct? a. b.

Question

1. Which of the following statements about costs and expenses is correct? a. b. c. A cost is a sacrifice of resources. Cost and expense are the same. All assets will become expenses. 2. A cost of goods sold statement for a retail business: a. Includes transportation-in costs. b. Has a cost of goods manufactured section. c. Covers a period of time. d. Both a and c 3. A period cost: a. Is also known as manufacturing cost. b. Includes both marketing and administrative costs. c. Will be expensed when products are sold. d. Is part of cost of goods sold

Explanation / Answer

Answer(1): Option "a" is correct.

A cost is a sacrifice of resources.

We have to sacrifice some resources to receive the benefits in the form of final product.

Answer(2): Option "a" is correct.

A cost of goods sold statement includes "Transportation -in" cost.

It is also called Frieght-in cost and it is the part of goods purchased.

Answer(3): Option "c" is correct.

A period cost includes both marketing and admininstrative cost.

This cost is not included in COGS calculation rather it is included in Income statement.

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