Businesses incur various costs in selling goods and services. Each business must
ID: 2376517 • Letter: B
Question
Businesses incur various costs in selling goods and services. Each business must decide which costs are expenses of the period and which should be included in the cost of the inventory. The following table lists various types of businesses along with certain types of costs they incur:
Accounting Treatment
Business Types of Costs Expense of the Period Inventory Cost Other Treatment
Retail shoe store Shoes for sale
Shoe boxes
Advertising signs
Grocery store Canned goods on shelves
Produce
Cleaning supplies
Cash registers
Frame shop Wooden frame supplies
Nails
Glass
Walk-in print shop Paper
Copy machines
Toner cartridges
Restaurant Frozen food
China and silverware
Prepared food
Spices
Required:
Fill in the table to indicate the correct accounting for each type of cost by placing an X in the appropriate column. For any costs that receive other treatment, explain what the appropriate treatment is for accounting purposes.
Explanation / Answer
OK Product costs are the same as inventory costs.
As far as the other costs are concerned
Expenses of the period.
Cleaning supplies
Other treatment (capitalize and depreciate over estimated useful life)
Advertising signs
Cash registers
Copy machines
China and silverware.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.