Select the incorrect statement regarding costs and expenses.

a. Some costs are initially recorded as expenses while others are initially recorded as assets.

b. Expenses are incurred when assets are used to generate revenue.

c. Manufacturing-related costs are initially recorded as expenses.

d. Non-manufacturing costs should be expensed in the period in which they are incurred.

Question

Business

Paloma Dodson

11 May, 16:58

Select the incorrect statement regarding costs and expenses.

a. Some costs are initially recorded as expenses while others are initially recorded as assets.

b. Expenses are incurred when assets are used to generate revenue.

c. Manufacturing-related costs are initially recorded as expenses.

d. Non-manufacturing costs should be expensed in the period in which they are incurred.

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Answers (1)

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Rodolfo Zhang · Answer 1

Answer: Option C

Explanation: In simple words, expenses refers to outflow of money from the pockets or account of any individual or an entity with the objective of acquiring or producing something.

Manufacturing cost refers to the amount of resources that were out flowed the organisation while producing a good or service. Since the resources are getting out flowed, these costs are always recorded as expense over the operational life of the entity.

Labor cost, electricity bill of machines and purchase cost of raw materials etc are some of many examples of manufacturing cost.