Question

Which of the following statements is not true under U.S. GAAP? a. Product costs increase the inventory account. b. Product costs include freight costs on goods purchased. c. Theoretically, product costs include buying costs and storage costs although in practice these costs are often times expensed. d. Product costs include freight costs to ship goods to customers. e. All of the above are true.

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Answer #1

Product cost is valued and included for closing inventory valuation purpose. Hence option a) is true.

Product cost includes freight cost related to purchases. So option b) is correct

Generally product cost is included with freight cost and storage cost, but some times a different treatment of expenditure may be followed. Option c) correct.

Product cost never includes freight cost related to sales or shipment to customers.

Hence answer is option d)

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