Unformatted text preview: What types of companies use periodic inventory? What types of companies use perpetual inventory? What are the similarities and differences between periodic and perpetual inventory systems? How does each method affect the inventory and cost of sales calculations? The book states that in a periodic inventory system, companies do not keep detailed inventory records of the goods on hand throughout the period. Instead, they determine the cost of goods sold only at the end of the accounting period—that is, periodically. Also the book states that in a perpetual inventory system, companies keep detailed records of the cost of each inventory purchase and sale. These records continuously—perpetually—show the inventory that should be on hand for every item. As the book states that perpetually is continuous and periodic means every once in a while. The periodic inventory affects the cost of sales calculations because they only calculate the cost of sales at the end of every accounting period whereas perpetually counts...
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This note was uploaded on 03/28/2011 for the course ACCT 349 taught by Professor Goyal during the Spring '09 term at University of Phoenix.
- Spring '09
- Financial Accounting