According to the expense recognition principle,inventory costs are expensed as cost of goods sold when inventory is sold.

The expense recognition principle, also known as the matching principle, requires expenses to be recognized in the same period as the related revenue. Therefore, inventory costs are recognized as an expense (cost of goods sold) when the inventory is sold and the revenue is earned. This ensures that the expenses are directly matched with the revenue they helped generate, resulting in a more accurate representation of the company's financial performance.