account 的 inventory control system

Perpetual inventory system:
a.Keeps a running, continuous record that tracks inventories and cost of goods sold on a day-to-day basis. However, physical inventory counts should be taken at least once a year to check on the accuracy of the clerical records.
b.Helps managers control inventory levels and prepare interim financial statements.
c.When merchandise is purchased, the inventory account is increased, and when inventory is sold, the sale and the inventory reduction are recorded simultaneously.

Periodic inventory system:
a.Computes the cost of goods sold and an updated inventory balance only at the end of an accounting period, when a physical count of inventory is taken.
b.The cost of goods purchased is accumulated by recording the individual purchase transactions throughout any given reporting period, such as a year.

Comparison of Systems
1.For annual financial statements, the two methods give equivalent results.
2.Historically, the perpetual system has been used for low-volume, high value items. It is more accurate in providing timely information, but it is more costly.
3.The periodic system has been preferred for high-volume, low-value. and fixed-value inventory operations. It is less accurate, especially for interim statements, and it is less costly unless accumulation of obsolete merchandise is likely.


Advantage of Periodic Inventory System over Perpetual Inventory System
1.Do not maintain detailed records.
2.May be used in business to reduce clerical and admin. cost.