1. differences in chart of Accounts under periodic and perpetual systems.
differences in chart of Accounts under periodic and perpetual systems.
differences in chart of Accounts under periodic and perpetual systems.
Solution
Periodic accounting
In periodic inventory system, the raw materials and other inventory along with cost of goods sold
is updated periodically. Basically each purchase of inventory is recorded in single journal entry.
Cost of goods sold account does not exist during the accounting period. Total inventory and
COGS account are reconciled and determined at the end of the accounting period
Perpetual accounting
As the name suggests perpetual accounting, the inventory and cost of goods sold is continuously
updated as the purchase and sales happen. Purchases are directly debited from accounts such as
inventory while cost of goods sold is recorded separately.