- CFA Exams
- CFA Exam: Level I 2021
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 21. Understanding Income Statements
- Subject 5. Expense Recognition
CFA Practice Question
Which one of the following items is a period cost?
B. Rent on a sales office
C. Sales commission expenses
D. Freight-in costs for merchandise inventory
A. Warranty cost for products sold
B. Rent on a sales office
C. Sales commission expenses
D. Freight-in costs for merchandise inventory
Correct Answer: B
Although a firm establishes a sales office to generate sales, it is difficult to associate the rent on the sales office with any specific sale. Instead, the rent amount is shown as an expense in the period benefited and is a period cost.
User Contributed Comments 4
| User | Comment |
|---|---|
| kalps | Cannot be asscoiated with particular sale, it is shown in the period benfitted |
| rocyang | overhead |
| johntan1979 | The opposite of product cost |
| EEEEvia | I thought the rent is liability |