Under the perpetual system, there are continual updates to the cost of goods sold account as each sale is made.
Periodic inventory method manual#
Conversely, the simplicity of a periodic inventory system allows for the use of manual record keeping for very small inventories.Ĭost of goods sold. It is impossible to manually maintain the records for a perpetual inventory system, since there may be thousands of transactions at the unit level in every accounting period.
Conversely, under a periodic inventory system, there is no cost of goods sold account entry at all in an accounting period until such time as there is a physical count, which is then used to derive the cost of goods sold.Ĭomputer systems. Under the perpetual system, there are continual updates to either the general ledger or inventory ledger as inventory-related transactions occur. There are a number of other differences between the two systems, which are as follows:Īccounts. Comparing Periodic and Perpetual Inventory Systems The periodic system relies upon an occasional physical count of the inventory to determine the ending inventory balance and the cost of goods sold, while the perpetual system keeps continual track of inventory balances. The more sophisticated of the two is the perpetual system, but it requires much more record keeping to maintain. The periodic and perpetual inventory systems are different methods used to track the quantity of goods on hand.
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