Describe similarities in product cost and long-term asset cost determinations: Define "Product Cost." Tell what product cost includes, and what it does not include. Tell what is included in the cost of a long-term asset, and what is not included. Understand the "Matching Principle:" Explain why the value of inventory is held in an asset account until it is sold. Tell how the process of recognizing cost of goods sold expense helps us to comply with the matching principle. Explain why the value of a long-term asset is held in an asset account until it is used. Tell how the process of recognizing depreciation expense helps us to comply with the matching principle. Interpret contra-asset account balances: Describe characteristics of a contra-asset account. Explain the importance of the Allowance for Doubtful Accounts Account. How does this account help users of financial information to have a better understanding of a company's assets? Explain the importance of the Accumulated Depreciation Account. How does this account help users of financial information to have a better understanding of a company's assets?