How do you differentiate the two inventory system? Periodic and Perpetual. What aspects do they differ?
How do you differentiate the two inventory system? Periodic and Perpetual. What aspects do they differ?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter7: Inventories: Cost Measurement And Flow Assumptions
Section: Chapter Questions
Problem 3E: Perpetual versus Periodic Inventory Systems Graham Company is trying to select an inventory system....
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How do you differentiate the two inventory system? Periodic and Perpetual. What aspects do they differ?
![PERIODIC
PERPETUAL
Useful for large businesses with
numerous inventories that
requires better monitoring of
inventory accounts;
Useful for smaller businesses
that maintain minimal amounts of
inventory;
Relies on physical counting of
inventories at the end of the
period to determine ending
İnventories;
Lesser inventory control as
updates to inventory are done
occasionally;
Continuous tracking of inventory
balances, every transaction;
Achieves better inventory control;
Popular with the advent of
technology, ie. bar coding,
computer scanning;
Movement to inventory is
debited/credited to inventory
account
Can allow use of manual record
keeping;
Maintains additional accounts:
purchase account, purchase
returns and allowances or
discounts for movements](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F81867538-b75f-43bc-886b-a8b046866186%2Fb94d249e-69ee-45e2-9731-ca7be2aaf7eb%2Fi34vn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:PERIODIC
PERPETUAL
Useful for large businesses with
numerous inventories that
requires better monitoring of
inventory accounts;
Useful for smaller businesses
that maintain minimal amounts of
inventory;
Relies on physical counting of
inventories at the end of the
period to determine ending
İnventories;
Lesser inventory control as
updates to inventory are done
occasionally;
Continuous tracking of inventory
balances, every transaction;
Achieves better inventory control;
Popular with the advent of
technology, ie. bar coding,
computer scanning;
Movement to inventory is
debited/credited to inventory
account
Can allow use of manual record
keeping;
Maintains additional accounts:
purchase account, purchase
returns and allowances or
discounts for movements
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