Inventory Software is maintained because hundreds of transactions incurred every day Under Periodic Inventory System, the inventory record are updated (usually) at the end of accounting period. Under Perpetual Inventory System, the inventory records are updated regularly after every transaction is occurred. The difference between a Perpetual Inventory System and the Periodic Inventory System are enumerated as follows: Subject Difference Between Perpetual & Periodic Inventory System The ending inventory is determined by a physical count and subtracted from the cost of goods sold. Purchase incurred during the period is debited to “Purchase Account” instead of Merchandise Inventory Account.Īt the end of the accounting period, the total purchase mentioned in the purchase account is added to the beginning balance of the inventory to compute the Cost of Goods Sold (COGS). Value of Closing stock and the Cost of Goods Sold (COGS) is measured by physical inventory count after a particular period. The inventory account is not updated for each purchase and each sale. This method is also known as Continuous Inventory taking method. Under this method, an entity added the materials in its inventory records when it is purchased and subtract the materials when goods sold from stock, for an internal transfer from one department to another, for the scrapped item and for other issues. Is the system where an entity continuously updates its inventory records to know the inventory balance instantly. Difference Between Perpetual & Periodic Inventory System.
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