Merchandise inventory

Periodic inventory system

under this system, no detailed record of inventory is being maintained during the year and requires actual physical count of goods remaining at the end of each period

Perpetual inventory system

this system involves the maintenance of detailed inventory records in the accounting system, and continuous record is maintained throughout the period

Periodic recording outline

purchases - purchase cogb

sales revenue - sales price for all goods sold

inventory account balance - number of units on hand

purchase sales and allowances

Perpetual recording outline

inventory - purchase cogb

sales revenue and cogs - together

sales returns and allowances

Periodic

inventory account is not changed, reflects the beginning inventory amount where every purchase is recorded in the purchases account

Perpetual

inventory account is increased for each purchase and decreased at cost for each sale, measuring the ending invenotry