Comparison of Periodic and Perpetual inventory systems (4000 words)

May 2016 | 11 pages | ID: CC9C24A6646EN
Sadia Saeed

Abstracts

To track the quantity of good available on hand, two different methods are used first is a periodic inventory system and other is the perpetual inventory system. Between these two methods perpetual inventory system is most refined method that requires an extensive maintenance of records. This report elaborates a detailed comparison of two inventories systems

Contents

What is the difference between the periodic and perpetual inventory systems?
Accounts
Computer systems
Cost of goods sold
Cycle counting
Purchases
Investigations of transaction
Purchases Account and Purchase Returns and Allowances Account
Sale Transaction
Closing Entries
Where each of these methods are applicable?
Periodic inventory system
Perpetual inventory system.
Inventory Systems and Cost Flows Combined
Periodic FIFO
Periodic LIFO
Periodic Average
Perpetual FIFO
Perpetual LIFO
Perpetual Average
Effects of using FIFO and WA methods
Average Cost Method
Advantages and Disadvantages of Weighted-Average Method
Weighted-Average under Periodic Inventory Procedure
Average costing method in periodic inventory system
Average method of costing in perpetual inventory system
Effect on Financial statements
Types of Inventory Methods
Impact of methods of inventory on Financial Statements
The Period of Rise of Prices
The Period of fall of Prices
Effect of perpetual and periodic inventory Methods on financial statements
Selection of methods of inventory valuation
References