Describe the difference between period costs and product costs.Period costs are operating costs that are expensed in the accounting period in which they are incurred. Product costs are all costs of a product that requires companies to treat as an asset for external financial reporting. These costs are recorded as an asset $($inventory$)$ on the balance sheet until the asset is sold. The cost is then transferred to an expense account $($ Cost of Goods ManufacturedCost of Goods SoldInventory ExpenseProduct Expense$)$ on the income statement.