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In cost accounting, interest on capital is typically treated as a period cost rather than a product cost. This means it is not directly assigned to the cost of goods sold or inventory but is instead charged as an expense in the period it is incurred. This approach helps in accurately reflecting the operational costs and profitability of the business during that specific period. However, some organizations may capitalize interest costs related to long-term projects, adding them to the cost of an asset until it is ready for use.

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