Periodic Inventory System

Periodic Inventory System - Periodic Inventory System As...

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Periodic Inventory System As described in this chapter, companies may use one of two basic systems of accounting for inventories: (1) the perpetual inventory system or (2) the periodic inventory system. In the chapter we focused on the characteristics of the perpetual inventory system. In this appendix we discuss and illustrate the periodic inventory system . One key difference between the two systems is the point at which the company computes cost of goods sold. For a visual reminder of this difference, you may want to refer back to Illustration 5-4 . Recording Merchandise Transactions In a periodic inventory system , companies record revenues from the sale of merchandise when sales are made, just as in a perpetual system. Unlike the perpetual system, however, companies do not attempt on the date of sale to record the cost of the merchandise sold . Instead, they take a physical inventory count at the end of the period to determine (1) the cost of the merchandise then on hand and (2) the cost of the goods sold during the period. And, under a periodic system , companies record purchases of merchandise in the Purchases account
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This document was uploaded on 11/03/2011 for the course ACCOUNTING ac 201 at Montgomery.

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Periodic Inventory System - Periodic Inventory System As...

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