It is commonly believed that first-learned words correspond with first-learned categories (both described as ‘basic level’) leading to the belief that language acquisition is a reasonably good indicator of early cognition. However, toddlers often overextend their first words. Do these errors reflect their comprehension? Two experiments were conducted in order to examine two-year-olds' production and comprehension of basic-level terms. The results showed overextensions both in production (e.g. children labelled a rocket ‘airplane’) and comprehension (e.g. they pointed to a rocket when airplane was requested). One reason toddlers extend labels to a wider conceptual domain is because they have not clearly differentiated basic-level concepts from related conceptual categories.