Purchase Solution

Perpetual vs periodic inventory systems

Not what you're looking for?

Ask Custom Question

Why are perpetual inventory systems so much more popular today than back in the early 1960s and earlier? Why would a company employing a perpetual inventory system still take a physical inventory periodically?

What are the journal entries a merchandising organization would use to record the purchase and subsequent sale of merchandise? How would these transactions differ with a periodic versus a perpetual inventory system?

Purchase this Solution
Solution Summary

The 463 word solution fully answers the questions together with a number of examples and further explanations.

Solution Preview

Perpetual inventory systems are more popular today for several reasons:

1. Computerized accounting systems allow sales to be costed out at the time of the sale transaction. POS (point of sale software) automatically reduces inventory when a sale is recorded.
2. Perpetual systems allow for monthly or even daily financial statements to track sales and cost of sales. Fifty years ago, a company really didn't know the financial results of a year of business until after inventory was counted and adjusted in the accounting records.
3. Modern inventory systems allow businesses to quickly adjust to changing prices, competitive issues and other marketing and supply problems.

Why would a company employing a perpetual inventory system ...

Purchase this Solution
Free BrainMass Quizzes
Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Basics of corporate finance

These questions will test you on your knowledge of finance.

View More Free Quizzes
Related BrainMass Solutions

  • Difference in perpetual vs periodic inventory method

    341265 Difference in perpetual vs periodic inventory method; importance of control programs A) Explain in detail the differences between perpetual and periodic inventory methods. Also, explain which provides better control over a firm's inventory.

  • Periodic and Perpetual Inventory Systems

    What are the similarities and differences between periodic and perpetual inventory systems? 2. What types of companies use periodic inventory systems? 3. What types of companies use perpetual inventory systems? 4..

  • Main distinctions of perpetual and periodic inventory systems

    233571 Distinctions of Perpetual and Periodic Inventory Systems Question: What is the main distinction between perpetual and periodic inventory systems? Which type of system provides better internal control over inventory? Explain why.

  • Inventory Accounting

    13089 Inventory Accounting An example illustrating Periodic vs Perpetual inventory accounting PERIODIC VS PERPETUAL ASSUMPTION EXAMPLE Assume: Type Units Unit Price $ BI 10 $1 10 Sell 8 @ $4 P1 10 $2 20 Sell 8 @ $4 P2 10 $3 30 PERIODIC

  • What types of companies use periodic inventory?

    118310 What types of companies use periodic inventory? What types of companies use periodic inventory? What types of companies use perpetual inventory? What are the similarities and differences between periodic and perpetual inventory systems?

  • Inventory methods and the effects to cost of goods sold

    The differences are that perpetual inventory systems are always up to date whereas periodic systems only report accurate inventory amounts after physical counts.

  • FIFO, LIFO calculations under periodic and perpetual method

    182754 FIFO and LIFO using periodic and perpetual systems. Cost-flow assumptions?FIFO and LIFO using periodic and perpetual systems.

  • Periodic inventory systems

    25724 Periodic inventory systems are discussed. Subject: What is the difference between perpetual and periodic inventory system?

  • Prepare journal entries

    190364 Prepare journal entries for the periodic and perpetual inventory method - CSI Systems Journalize the following merchandising transactions for CSI Systems assuming it uses (a) a periodic inventory system and (b) a perpetual inventory system.

View More Related Solutions