4 5 perpetual inventory system periodic

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Unformatted text preview: ms. 4 • • • • • • 5 • • • • • • Perpetual Inventory System Periodic Inventory System The inventory account is continuously updated as purchases and sales are made. The inventory account is adjusted at the end of a reporting cycle. T ransaction or Event Periodic Inventory Perpetual Inventory Routine purchases of various inventory items Costs debited to purchases account Costs debited to inventory account Sale of inventory No accounting entries made to inventory Debit Cost of goods sold and credit inventory Physical count to End-of-period No separate determine ending accounting entries and determination of cost of inventory and cost of related activities goods sold necessary goods sold 6 Inventory Recording Source of information Model Periodic System Perpetual System Beginning Inventory Add: Purchases Less: Ending Inventory Cost of goods sold The Inventory value and the COGS are computed by indentifying each unit that is sold and each unit that is...
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