Periodic SystemUnder periodic system inventory records are notchanged when purchases and sales occur..The amount of ending inventory is determined by aphysical count of the goods remaining on hand at theend of an accounting period.It is often used by abusiness that sells a large numberof goods with low unit price.Merchandise Inventory is updated according to thebalance
Periodic System • Under periodic system inventory records are not changed when purchases and sales occur. • The amount of ending inventory is determined by a physical count of the goods remaining on hand at the end of an accounting period. • It is often used by a business that sells a large number of goods with low unit price. • Merchandise Inventory is updated according to the balance
Periodic System-How to calculate the cost of goods sold?
Periodic System How to calculate the cost of goods sold?
The cost of goods sold is computed then bysubtracting the amount of ending inventoryfrom the goods available for sale.Cost of goods available for sale - Ending inventory= Cost of goods sold
• The cost of goods sold is computed then by subtracting the amount of ending inventory from the goods available for sale. Cost of goods available for sale – Ending inventory = Cost of goods sold
Disadvantage of Periodic System the incomecan not be updated to reflectinventory and dynamic balances, it's noteasy to manage staff to grasp the situation: Easy to cover up the loss of natural andman-exist in inventory management
Disadvantage of Periodic System • the income can not be updated to reflect inventory and dynamic balances, it’s not easy to manage staff to grasp the situation; • Easy to cover up the loss of natural and man-exist in inventory management
IIInventory Valuation Methods
Ⅱ Inventory Valuation Methods