 Hello in this lecture we will define period costs. According to fundamental accounting principles Wild 22nd edition the definition of period costs is expenditures identified more with a time period than with finished product costs including selling and administrative costs. Support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a youtube page. We also include added resources such as excel practice problems pdf files and more like quickbooks backup files when applicable so once again click the link below for a free month membership to our website and all the content on it so we're basically breaking out the period costs of selling and administrative from the costs related to inventory particularly in a manufacturing company so period costs are usually going to be in a multi-step income statement where we will then have the costs related to the cost of good sold and then all other costs including selling and administrative could be underneath that broken out into a different section of selling and administrative those sections including things like the selling within the store if we had the sales agent within the store the salary for the sales agent the rent on the store where we're going to sell the items so the inventory and it couldn't include things like the corporate office so the corporate office whether it be the depreciation on the corporate office basically everything that goes on within the corporate office rather than the warehouse where we are producing the inventory or the store where we're basically selling the inventory corporate office period costs include the depreciation the salaries of the people working in the corporate office which are usually going to be the administrative salaries we can compare and contrast that to the costs that are directly related to the inventory so direct costs and indirect costs things like the materials things like the labor we could have the overhead costs including rent on a factory the supervisor salary small things like glue and whatnot and the maintenance these would all be included in the inventory items and when we finally do expense these these items and we're not going to expense them when we incur them because they're being incurred as part of inventory so these costs will then be capitalized then when we expense them it will be in the form of cost of goods sold so that our multi-step income statement then will have inventory minus the cost of goods sold and then underneath that those items we could break out separately the period costs those costs that are related to the time period rather than the inventory generally being selling and administrative costs