Periodic Expense Definition Periodic expenses are costs that occur less frequently than monthly. They are predictable but not as frequent.
What does periodic expenses mean?
Periodic expenses are those costs that are the same and repeat regularly but don't occur every month (e.g., quarterly). They require planning ahead and budgeting to pay periodically when the expenses are due.
Which expense is considered a fixed expense?
Some of the most common fixed expense samples include:
- Rent or mortgage payments
- Renter’s insurance or homeowner’s insurance
- Cell phone service
- Internet service
- Health, disability or life insurance premiums
- Property taxes
- Childcare expenses
- Student loan or car loan payments
Which of the expenses listed is a variable expense?
You probably have a lot of variable expenses in your budget, and some are necessary spending while others aren’t. Here’s a list of common variable expenses: Groceries; Going out to eat; Gas or fuel; Car maintenance; Home maintenance; Haircare and beauty products; Entertainment; Vacations; Prescriptions; Clothing; Birthday and holiday spending; Hobbies
Which of the following is a period expense?
all costs in the income statement other than cost of goods sold, (administrative, marketing) treated as expenses of the accounting period in which they are incurred, for manufacturing companies, all non-manufacturing costs are period costs Selling and administrative costs are classified as
What are periodic fixed expenses?
A fixed expense is a cost that's typically constant. Fixed expenses are paid at regular intervals—often monthly. Some fixed expenses are what are known as “periodic fixed expenses.” These expenses are fixed and regular, but don't occur monthly—they may occur quarterly or annually instead, for example.
What are 3 types of expenses?
3 Main Types of ExpensesFixed expenses. Fixed expenses are the easiest to budget for. Because they are fixed, they are easy to predict. ... Periodic expenses. Periodic expenses are similar to fixed expenses. ... Variable expenses. As the name suggests, variable expenses can fluctuate a lot.
What expenses are considered to be periodic or ongoing expenses?
Periodic expenses include things like annual vehicle registration, major car repairs, and holiday gift giving. For things you know are going to come up at least once a year, set aside a little bit each month to cover the cost.
What is the difference between a variable expense and a periodic expense?
Variable expenses, like food and groceries, can vary month-to-month, and generally aren't due on a set date. Periodic expenses include expenses that are billed quarterly or annually, as well as expenses like vehicle maintenance that come up now and then. Let's talk about each of these types of expenses in turn.
Do periodic expenses remain the same every month?
Periodic expenses are those costs that are the same and repeat regularly but don't occur every month (e.g., quarterly). They require planning ahead and budgeting to pay periodically when the expenses are due.
What are 10 examples of expenses?
Common expenses might include:Cost of goods sold for ordinary business operations.Wages, salaries, commissions, other labor (i.e. per-piece contracts)Repairs and maintenance.Rent.Utilities (i.e. heat, A/C, lighting, water, telephone)Insurance rates.Payable interest.Bank charges/fees.More items...
What is an example of periodic monthly expenses?
LSS FINANCIAL COUNSELING SERVICE Periodic Expenses are items such as insurance or vehicle registration which may be paid annually or quarterly instead of monthly. It is important to set money aside for periodic expenses and unplanned emergencies.
What are expenses that do not change called?
What Is a Fixed Cost? The term fixed cost refers to a cost that does not change with an increase or decrease in the number of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any specific business activities.
What are two types of expenses?
Expenses can be categorized in a variety of ways. Expenses can be defined as fixed expenses, such as rent or mortgage; those that do not change with the change in production. Expenses can also be defined as variable expenses; those that change with the change in production.
What are 5 examples of variable expenses?
Variable costs are costs that change as the volume changes. Examples of variable costs are raw materials, piece-rate labor, production supplies, commissions, delivery costs, packaging supplies, and credit card fees.
What are examples of variable expenses?
Fixed expenses generally cost the same amount each month (such as rent, mortgage payments, or car payments), while variable expenses change from month to month (dining out, medical expenses, groceries, or anything you buy from a store).
What are the types of expenses in accounting?
The several types of expenses are:Cost of Goods Sold.Operating Expenses.Financial Expenses.Extraordinary Expenses.Non-Operating Expenses.Non-Cash Expenses.Prepaid Expenses.Accrued Expenses.More items...
What are the 4 types of expenses?
Terms in this set (4)Variable expenses. Expenses that vary from month to month (electriticy, gas, groceries, clothing).Fixed expenses. Expenses that remain the same from month to month(rent, cable bill, car payment)Intermittent expenses. ... Discretionary (non-essential) expenses.
What are the 5 examples of expenses?
Examples of expenses include rent, utilities, wages, salaries, maintenance, depreciation, insurance, and the cost of goods sold.
What are the 2 types of expenses?
Types of Expenses The most common way to categorize them is into operating vs. non-operating and fixed vs. variable.
What are kind of expenses?
Examples of Expenses Common expenses are the cost of goods sold, rent expense, wages expense, and utilities expense.
What are periodic expenses?
Periodic expenses are costs that occur on an irregular basis rather than monthly. Here are some examples of periodic monthly expenses you may have:
How do I incorporate them into my monthly budget?
Once you have identified your periodic expenses, break them into monthly amounts.
What is fixed expense?
Fixed Expenses. Fixed expenses are the easiest type of expense for which to prepare, because they come in at both a consistent interval and amount. For example, expenses like your rent or mortgage, your car insurance, and your internet bill are fixed. Sure, they may vary by a few dollars from one month to the next, but for the most part, ...
What are the different types of expenses?
The more you understand these 3 types of expenses, the better you can financially prepare for them. To review: 1 Fixed Expenses occur in predictable amounts and intervals. In most cases, they occur on a monthly basis. 2 Periodic Expenses are similar to fixed expenses, but they occur much less frequently. (i.e. quarterly or annually) 3 Variable Expenses can be influenced by your financial behavior and decision-making. Additionally, they can be divided into 2 sub-categories: necessary or discretionary.
What is discretionary expense?
The discretionary portion of variable expenses are things like recreational spending. For example, buying a new pair of shoes that you didn’t technically ‘need’, would be considered a variable, discretionary expense.
What is the easiest expense to control?
Variable expenses are the easiest to control when it comes to your financial life. You just have to make a conscious choice to do so.
How to budget for fixed expenses?
The easiest way to budget for fixed expenses, is to start each month with a copy of the previous month’s budget. That way, none of your fixed expenses will fall through the cracks.
What are the two categories of variable expenses?
Variable Expenses. You can break variable expenses into two sub-categories: necessary and discretionary. The necessary portion of variable expenses are things like gas for your car, your electric bill, and your monthly food budget.
What happens when you reduce your fixed expenses?
When you reduce your fixed expenses, you are decreasing your monthly cost of living.
How to plan for a year's worth of periodic expenses?
The simplest way to plan for a year’s worth of periodic expenses is to do a thorough inventory of all the periodic expenses you incurred last year. Any expense that isn’t fixed and isn’t accounted for in your variable category is periodic and goes in the pile. Once everything is gathered, total up the cost of every expense and divide by 12.
Why don't we forget to account for periodic expenses?
You don’t forget to account for your rent or your electric bill because you have to pay those every month.
What is the trickiest expense to plan for?
Periodic expenses, by comparison, are the trickiest expenses to plan for because while they occur regularly, they’re usually rare (maybe once a year) and can vary widely. Gift giving falls into this category, along with maintenance and repair costs for your home and automobile.
What are the three categories of expenses in a budget?
A normal budget breaks down expenses into three categories: Fixed, Variable, and Periodic.
How to plan for variable expenses?
You can plan for variable expenses by examining your spending over a period of time and creating an average for each category. This means that each individual payment might not hit the budget exactly the way you planned, but over time and multiple payments you’ll (hopefully) arrive at your estimate.
Is car insurance a fixed expense?
Your car payment, insurance payment, and any other set, regular payment is a fixed expense. They’re easy to plan for because you know what they’ll cost and how often you’ll need to pay them. Variable expenses are the biggest category. These include food, utilities, entertainment, and transportation costs.
Do periodic expenses outpace savings?
It’s an estimate, of course, so some years your periodic expenses might outpace your designated savings, and some years you might have money left over. Even if it’s not exact, at least you’ll never be caught unprepared by a periodic expense again. Happy budgeting!
What are variable expenses?
Just as the name says, these are your expenses that will vary month-to-month and are probably the largest spending category. Variable expenses include such things as groceries, gas for your vehicle, utilities, entertainment expenses, and clothing.
What are fixed expenses?
Fixed Expenses. These are the expenses you have that don’t change month-to-month. Your mortgage or rent, car payment, and insurance are examples of fixed expenses. They may vary slightly from year-to-year (say, a rent increase) but overall you can count on them to stay the same for at least a year at a time.
What are the hardest expenses to plan for?
Periodic Expenses. These are the hardest expenses to plan for and the ones most likely to take you by surprise. Periodic expenses include things like annual vehicle registration, major car repairs, and holiday gift giving.
Is utilities a fixed expense?
Utilities can become a fixed expense if your service provider offers an “equalizer” plan. These plans average your usage over time and charge the same each month, rather than spiking during times of increased usage (think summer AC bills in hot climates).
What is periodic expense?
Unlike fixed and variable expenses that come up every month, periodic expenses are costs that come up less often than monthly. They might be due annually or a few times a year. Or they might not even come at a regular interval at all.
How to tackle periodic expenses?
To effectively tackle periodic expenses in your budget, you need to identify as many as you can before they become due. Here are some examples of fixed, regular costs to get your wheels turning. These come up less frequently than every month and are of a predictable amount.
How to divide annual expenses?
Divide the annual amount for each periodic expense category by 12. For example, if last year you spent $1,500 on holiday expenses, you’ll need to set aside $125 each month this year. Add that amount as a monthly line in your budget.
When planning your budget, do you keep them in mind?
No matter when or how much your periodic expenses are, keeping them in mind when planning your budget will dramatically increase your odds of budgeting success.
Can periodic expenses ruin your budget?
Without careful planning, it’s easy to let periodic expenses ruin your budget. Because they occur infrequently, irregular expenses can catch us off guard. The good news is that this common budgeting problem is easy to fix. In fact, planning for periodic expenses may be the key to mastering your budget once and for all.
Is periodic expense real?
Look: periodic expenses are real expenses, not a series of flukes that keep derailing your perfect budget. Making this realization allows you to budget for them successfully .The best way to pay for these big expenses? Spread their cost out over time. Here’s how to set yourself up for success:
Is variable periodic expense a fixed expense?
It’s also important to consider your variable periodic expenses. These are expenses that you know you’ll face at some point, but don’t come with a fixed cost. Here’s a few examples to get you started:
What is periodic expense?
A periodic expense is a cost that appears irregularly rather than monthly. Examples include tuition, car registration, and annual membership fees. Periodic expenses are harder to budget for. They’re easy to forget, and they can vary widely.
Why is it important to have periodic expenses in your budget?
You don’t want to get hit with a big annual bill , then panic and scramble to come up with the money. Being unprepared to cover financial obligations is how some people get trapped in a cycle of debt. That’s why it’s extremely important to account for all periodic expenses in your budget.
What Are the 3 Types of Expenses in a Budget?
The three types of expenses in a budget are fixed, periodic, and variable . Fixed expenses are recurring expenses that don’t change and are usually paid monthly. Periodic expenses are less frequent (e.g. annually) and occur in predictable amounts. Variable expenses are often discretionary and can often be changed or eliminated by behavior.
What is a Fixed Expense?
For household budgeting, fixed expenses are predictable costs with amounts and due dates that don’t change. Fixed expenses will probably take up the largest percentage of your budget since rent, insurance, and car payments are fixed expenses. You often have limited control and a legal obligation to pay your fixed expenses.
What are Variable Expenses?
Variable expenses, also called flexible expenses, are expenses that fluctuate month to month. Many variable expenses are discretionary (such as entertainment, beauty products, and eating out), but some necessities (gas, groceries, and utilities) are also variable expenses.
How to reduce variable expenses?
Variable expenses can often be reduced or eliminated from your budget by changing your spending habits and making different choices. Here are some ways you can lower variable expenses: 1 Eat at Home More Often 2 Slash Your Grocery Spending 3 Save on Utility Bills 4 Do a No Spend Challenge
How can variable expenses be reduced?
Variable expenses can often be reduced or eliminated from your budget by changing your spending habits and making different choices. Here are some ways you can lower variable expenses:
