Question

For inventoriable costs to become expenses under the matching principle,

a) All accounts payable must be settled.
b) The product must be finished and in stock.
c) The product must be expensed based on its percentage-of-completion.
d) The product to which they attach must be sold.

Answer 1

For inventoriable costs to become expenses under the matching principle, the product to which they attach must be sold.

Step-by-step explanation:

The correct answer is d) The product to which they attach must be sold. In order for inventoriable costs to become expenses under the matching principle, the product to which these costs relate must be sold. Until the product is sold, the costs associated with it remain as inventoriable costs on the balance sheet. Once the product is sold, these costs are then expensed on the income statement.