Requirement $1.$ Describe the difference between period costs and product costs.

are operating costs that are expensed in the accounting period in which they are incurred.

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 $($

statement.

on the income