Concept explainers
Perpetual Inventory System: Perpetual Inventory System refers to the inventory system that maintains the detailed records of every inventory transactions related to purchases and sales on a continuous basis. It shows the exact on-hand-inventory at any point of time.
Accounting rules for journal entries:
- a) To Increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
- b) To Decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.
To Prepare: (a) Journal entries, (b) posting of balances and transactions, and (c) Trial Balance.

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