Question

In: Accounting

1. Describe the difference between a periodic and a perpetual inventory system 2. What are closing...

1. Describe the difference between a periodic and a perpetual inventory system

2. What are closing entries and why do we do them?

3. What is the adjusting process and why is used?

Solutions

Expert Solution

1)

Nature Periodical Inventory System Perpectual Inventory System
Meaning system of inventory accounting in which position of stock in hand and cost of goods sold is determined by physical counting system of inventory accounting in which real time tracking of inventory movements is done
Accounts Updation Inventory accounts do not reflect accurate picture at all times. The correct inventory position is only updated in accounts at the time of physical counting Inventory accounts are updated on a real time basis
Determination of Cost of Goods Sold At the end of specific period on application of mathematical formula Can be determined at any time from inventory system
Preferrable For smaller enterprises For larger enterprises
Effects on Business Functioning Continuity of business operations effected at the time of physical counting Continuity of business operations not effected
Requirement Can be maintained manually Requires computer systems

Related Solutions

What is the main difference between a perpetual inventory system and a periodic inventory system?
What is the main difference between a perpetual inventory system and a periodic inventory system? Which system is used more often by major companies?    
What is the major difference between a periodic and perpetual inventory system
What is the major difference between a periodic and perpetual inventory system
What is the main difference between a perpetual inventory system and a periodic inventory system? Do...
What is the main difference between a perpetual inventory system and a periodic inventory system? Do you think one is preferential over the other? Explain.
Describe the differences between a periodic, perpetual, and modified perpetual inventory system.
Describe the differences between a periodic, perpetual, and modified perpetual inventory system.
What are the differences between Perpetual Inventory System and Periodic Inventory System?
What are the differences between Perpetual Inventory System and Periodic Inventory System?
describe the difference between periodic and perpetual inventory systems. Explain in detail
describe the difference between periodic and perpetual inventory systems. Explain in detail
1. What is the difference between periodic and perpetual inventory tracking? Are there cases where a...
1. What is the difference between periodic and perpetual inventory tracking? Are there cases where a health care organization could use both methods of inventory costing for different types of inventory, and if so, please explain why they would do this.
1) What is a periodic inventory system, and what is a perpetual inventory system? Why might...
1) What is a periodic inventory system, and what is a perpetual inventory system? Why might an organization choose one over the other? 2) How do accountants keep track of the number of units sold, if they are using the periodic inventory method? (Hint-basic equation). 3) What are the four basic cost flow methods for inventory valuation? Briefly describe each method and indicate the implications for financial reporting. 4.) How might IFRS affect inventory costing if incorporated into US GAAP?
What is the difference between perpetual and periodic inventory systems? Give examples of the type of...
What is the difference between perpetual and periodic inventory systems? Give examples of the type of businesses that are likely to use (i) perpetual inventory system and (ii periodic inventory system.
We are studying the perpetual inventory system and the periodic inventory system. Some questions: what is...
We are studying the perpetual inventory system and the periodic inventory system. Some questions: what is the difference between the two systems? What is involved with using each system? Which do you think is more common and why? How does FIFO, LIFO and Weighted Average differ? How are they alike? Why don't companies use specific identification more often? Why is this method rare?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT