Inventory System1

Inventory System1 - Under the perpetual system purchases purchase returns and allowances purchase discounts sales and sales returns are immediately

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Inventory Systems: Perpetual or Periodic Companies may use either the perpetual system or the periodic system to account for  inventory. Under the  periodic system , merchandise purchases are recorded in the  purchases account, and the inventory account balance is updated only at the end of  each accounting period. Perpetual inventory systems have traditionally been associated  with companies that sell small numbers of high-priced items, but the development of  modern scanning and computer technology has enabled almost any type of  merchandiser to consider using this system. 
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Unformatted text preview: Under the perpetual system , purchases, purchase returns and allowances, purchase discounts, sales, and sales returns are immediately recognized in the inventory account, so the inventory account balance should always remain accurate, assuming there is no theft, spoilage, or other losses. Consider several entries under both systems. The reference columns are removed from the illustration to simplify what you're seeing. (Note: Ap stands for accounts payable, and AR stands for accounts receivable.)...
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This note was uploaded on 11/14/2011 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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