Question

Describe the differences between a periodic, perpetual, and modified perpetual inventory system.

Answer 1

perpetual inventory	periodic inventory	modified perpetual inventory
it is an inventory system that records inventory into the accounting system on continous basis	it is an inventory system that records inventory level at specific points in time.	it provides details inventory record os increases and decreases in quantities only-not dollar amount(memo device that can determine the level of inventory at any point in time.
This type of system relies heavily on automation to instantly track purchases and sales and update accounting system easily.	Periodic systems use physical counts audit where employees actually count each and every item in store to accurate inventory level.	companies takes physical inventory once a year.
In perpetual system information is constantly updated at the time of each sale.	periodic sysytem only reports the cost of goods sold at the end of accounting period .	All companies need periodic verification of the inventory records by actual counts ,weigh,or measurement with the counts compared with detailed inventory records.