Period costs appear in the income statement as operating expenses, including selling, general, and administrative (SG&A) expenses. These are deducted from gross profit to calculate operating income, a critical metric for evaluating a company’s cost structure. High fixed period costs can cause significant fluctuations in net income with changes in sales volume, underscoring the importance of cost management. Period costs…
You can choose any recordkeeping system suited to your business that clearly shows your income and expenses. You need good records to prepare accurate financial statements. These include income (profit and loss) statements and balance sheets. Businesses (or their accountants) then record the accounting effects of transactions and file the supporting records based on the type of transaction and when…