What is the major difference between a periodic and perpetual inventory system?

A) Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account.
B) Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory.
C) Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the accounting period.
D) All of the answers are correct.

Under a periodic inventory system, inventory balances are only updated at the end of the accounting period. Purchases are recorded in a Purchases account, and no journal entry is recorded at the time of sale. At the end of the accounting period, a physical count of inventory is performed, and adjustments are made to the inventory balance based on the cost of the inventory on hand. This system requires adjusting entries to account for purchases returns and allowances, as well as discounts.

Under a perpetual inventory system, inventory is updated in real-time as items are bought and sold. When inventory is purchased, it is debited to the inventory account, and when it is sold, the cost of goods sold and inventory accounts are updated. This system does not require end-of-period adjustments because inventory balances are always up-to-date.