Consequently, even with a perpetual system, the inventory records must be reconciled occasionally with the items actually present to reestablish accuracy. In actual practice, recording mistakes as well as losses such as theft and breakage create some (hopefully small) discrepancies. Thus, theoretically, the balance found in that general ledger account at any point in time will be identical to the merchandise physically on hand. is in use, all additions and reductions are monitored in the inventory T-account. How is the recording of an inventory purchase carried out in a perpetual system?Īnswer: When a perpetual inventory system Accounting system that maintains an ongoing record of all inventory items records increases and decreases in inventory accounts as they occur as well as the cost of goods sold to date. A perpetual system-which frequently relies on bar coding and computer scanning-maintains an ongoing record of all items present. Question: In an earlier chapter, differences between a perpetual inventory system and a periodic inventory system were discussed briefly. Provide journal entries for a variety of transactions involved in the purchase of inventory using both a perpetual and a periodic inventory system.Identify the attributes as well as both the advantages and disadvantages of a periodic inventory system.Identify the attributes as well as both the advantages and disadvantages of a perpetual inventory system.At the end of this section, students should be able to meet the following objectives:
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