Periodic Inventory System

Periodic Inventory System

See Also:
Perpetual Inventory System
Just in Time Inventory System
Economic Order Quantity (EOQ)
Days Inventory Outstanding Analysis
How to manage inventory

Periodic Inventory System Definition

A periodic inventory system or the periodic inventory method is an accounting method in which you determine the amount of inventory at the end of each accounting period or in specified periods. Furthermore, a periodic inventory system requires a physical count for each period. Then quantify the amount on the financials.

Periodic Inventory System Meaning

A periodic inventory system differs from the perpetual inventory method because there is no continuous record taken to determine the inventory value. Take the actual count of inventory items. Then multiply each of the inventory items by its unit price. Often times, use both methods where the perpetual keeps a running account of the inventory value. A physical periodic count makes sure that the value remains even. By combining the two inventory methods, it means that the financial statements will be most accurate per the periodic method. Protect the inventory from day to day per the perpetual method.


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Periodic inventory System
Periodic inventory System

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