What Is Periodic Inventory System With Example?
Periodic Inventory System is a method of inventory management in which the inventory records are updated periodically, usually at the end of each accounting period. Under this system, the inventory balance is determined by counting the physical inventory at the end of the accounting period and subtracting it from the beginning balance to determine the cost of goods sold during the period. For example, a company that sells furniture may update its inventory records at the end of each quarter by counting the physical inventory and adjusting the records accordingly. This method of inventory management is less accurate than a perpetual inventory system but requires less time and resources to maintain.