Lesson: Product vs. Period Costs

In this lesson, Nick Palazzolo, CPA, breaks down the differences between product costs and period costs, crucial concepts for categorizing business expenses. He dives into the nitty-gritty of how to decide whether to capitalize a cost as part of an asset's value or to expense it immediately. Using easy-to-understand examples, he illustrates what counts as a capitalizable cost, such as materials for manufacturing a product, and contrasts these with period costs, like cleaning supplies. By the end of the session, the logic behind capitalizing product costs as inventory on the balance sheet versus expensing period costs on the income statement will be much clearer, and Nick ensures that recalling the basics of these cost types will be a breeze.