Periodic inventory
Encyclopedia
Periodic inventory is a system of inventory in which updates are made on a periodic basis. This differs from perpetual inventory
systems, where updates are made as seen fit.
In Periodic Inventory System no effort is made to keep up-to-date records of either the inventory or the cost of goods sold. Instead, these amounts are determined only periodically-usually at the end of each year.
As the The foundation of the periodic inventory system is the taking of a complete physical inventory at year-end. This physical count determines the amount of inventory appearing in the balance sheet. The cost of goods sold for the entire year then is determined by a Short Computation.
Perpetual inventory
In business and accounting/accountancy, perpetual inventory or continuous inventory describes systems of inventory where information on inventory quantity and availability is updated on a continuous basis as a function of doing business. Generally this is accomplished by connecting the inventory...
systems, where updates are made as seen fit.
In Periodic Inventory System no effort is made to keep up-to-date records of either the inventory or the cost of goods sold. Instead, these amounts are determined only periodically-usually at the end of each year.
As the The foundation of the periodic inventory system is the taking of a complete physical inventory at year-end. This physical count determines the amount of inventory appearing in the balance sheet. The cost of goods sold for the entire year then is determined by a Short Computation.