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Accounting Basis: Period Cost

2011/1/14 10:37:00 62

The period cost is referred to as the period cost, which is directly related to the expenses deducted from the sales revenue of the enterprise during the current period.

From the enterprise

Profit and loss

To be sure, the period cost is deducted as the business profit of the company in the current period after deducting from the product sales cost, the product sales tax and the additional sales from the product sales revenue.

The current period expenses are deducted from the current profits and losses in full, and the amount incurred does not affect the next accounting period.

Compared with the cost of production, the period cost has the following characteristics:

(1) the relationship with product production is different.

The occurrence of the period cost is a requirement for the production of products to provide normal conditions and management, and is not directly related to the production of the products themselves. Production costs refer to the costs directly related to the production of products, and they should be directly counted or allocated into the relevant products.

(2) the relationship with the accounting period is different.

The period cost is only related to the current period of the cost, does not affect or not apportionment to other accounting periods; the current part of the production cost is pferred to the product cost in the current period, and the unfinished part is pferred to the next stage to continue processing, which is related to the accounting period before and after.

(3) the relationship between accounting statements and accounting statements is different.

The period cost is directly included in the current profit and loss account, deducting the profits and losses of the current period; the finished part of the production cost is converted to the finished product, and the finished product has been sold.

cost

The profit and loss statement is then included as the cost of product sales, while unsold and unfinished products should be included in the balance sheet as inventories.

Therefore, the production cost can also be called the inventory cost, and the cost of the period is called the non - inventory cost.

According to the matching principle, when a business income is recognized in accounting, the related expenses arising from the business income must be the same.

accounting

Confirm during the period.

For example, the cost of production, such as direct material, direct labor and manufacturing cost, should be costing, and the product should be matched with sales revenue when the product is sold.

The period cost, because it can not provide clear future earnings, is dealt with in an immediate confirmation way when these costs occur in accordance with the prudence principle.

For example, the advertising fees paid by enterprises will benefit from any accounting period in the future.

It is difficult to ascertain.

Even if the cost of the period is related to the income of certain accounting periods in the future, it is impossible to predict the future income, which is the basis for the cost of the apportionment period.

Therefore, in order to simplify accounting work, it is more reasonable to confirm the period cost immediately.

In addition, the cost of the period is directly proportional to the current operating revenue. In the long run, due to the relatively uniform amount of each period, the impact on profit and loss is not large.

Period costs generally include three categories: sales cost, management cost and financial cost.