A202 Reading Response #2 Sample answersInstructions:Do the assigned textbook reading for Tuesday’s lecture (pages 74-87). Then type your answers to the questions in the textbox below. Be sure you correctly save and submit your response. No late responses will be accepted.1. Does GAAP require firms to present product costs separately from period expenses on the income statement? Why do many firms do so?GAAP does require that firms match, in the same period, the revenues from the sale of a product with the costs incurred to make and sell the product. Therefore, many firms use a two-step reporting format (separating product costs from period expenses) to accomplish this. There is, however, some flexibility allowed by GAAP in the reporting format that is used, and some firms use a simpler single-step approach.2. In what significant way does the flow of costs differ between a service firm and a manufacturing firm?
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