how do you record a period cost? Essentials Book says it's recorded it it's own ledger account but in the exercises they put a period cost in the general journal
How does using a period cost affect the accounting equation? As the period cost is assigned in its entirety, regardless of how many stock items were sold, does this mean it overstates the cost of goods sold or cost of sales? Again textbook says it understates cost of goods sold which I don't understand
A period cost is recorded in the relevant journal, not necessarily a journal journal. If it is a cash payment of the cost, it goes into cash payments journal. If it is on credit it goes in the general journal as it is a sundry creditor. Period cost is simply the way buying expenses have been recorded in unit 3, in their own ledger account classified under "Cost of Goods Sold" in the income statement. The only actual change in recording of buying expenses is with product costing, which includes buying expenses within the value of stock if it is logical to do so, eliminating the need for the extra ledger account to record the buying expense.
Period cost results in Cost Of Goods Sold being overstated, as it records the entire buying expense as being incurred in the period it is paid/charged, when in reality the entire expense is not incurred as the stock it is associated with has not been sold. It understates cost of sales, as the figure representing the buyers expense for each stock only includes the supplier's price of stock itself as the buying expenses weren't calculated in the value of stock. The essentials textbook has a mistake which says COGS is understander, COGS is overstated, I actually encountered that issue earlier today when I was writing notes on period cost.