ACCT1003_Inventory_

ACCT1003_Inventory_ - Accounting for Inventory Inventory...

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Accounting for Inventory
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Inventory and COGS are continuously updated each time inventory is purchased, sold or returned Perpetual systems maintain a running record to show the inventory on hand at all times. Inventory Accounting Systems Perpetual systems are used mainly by large businesses that operate a POS system
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Periodic system used mainly by small businesses Which operate a manual system. Periodic systems do not keep a continuous record of inventory on hand. Inventory Accounting Systems
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1. Debit Cash or Accounts Receivable Credit Sales Revenue 2. Debit Cost of Goods Sold Credit Inventory Perpetual System Purchase of Inventory Debit Inventory Credit Cash or Accounts Payable When inventory is sold:
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Freight In added to the cost of inventory Perpetual System Physical count is made at least once a year to verify the value of inventory Adjustment made at year end for excess or shortage of inventory.
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Periodic System At the end of the period make a physical count and apply unit cost to
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ACCT1003_Inventory_ - Accounting for Inventory Inventory...

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