Asked by Vhukhudo Mukhudwane on Jul 03, 2024
Verified
Discuss the reasons a company would consider using a periodic inventory system.
Periodic Inventory System
A method of inventory management in which the inventory levels are updated and cost of goods sold is calculated periodically at the end of a reporting period.
- Comprehend the use and effects of different types of inventory systems on accounting and reporting.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
Companies selling a variety of merchandise with low unit prices often use the periodic inventory system. The record-keeping aspects of a periodic system are relatively simple. A firm records costs and quantities purchased which are later compared to the quantities remaining on hand at the end of the accounting period. In this way, the cost of the units sold during the period can be calculated.
Learning Objectives
- Comprehend the use and effects of different types of inventory systems on accounting and reporting.
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