Concept explainers
Periodic Inventory System: It is a system in which the inventory is updated in the accounting records on a periodic basis such as at the end of each month, quarter or year. In other words, it is an accounting method which is used to determine the amount of inventory at the end of each accounting period.
Perpetual Inventory System refers to the inventory system that maintains the detailed records of every inventory transactions related to purchases and sales on a continuous basis. It shows the exact on-hand-inventory at any point of time.
Explain the inventory costing method which produces the same results in both the periodic inventory system as well as perpetual inventory system.
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Horngren's Financial & Managerial Accounting, The Managerial Chapters, Student Value Edition (6th Edition)
- Which inventory costing method is almost always done on a perpetual basis? A. specific identification B. first-in, first-out C. last-in, first-out D. weighted averagearrow_forwardDescribe costing inventory using weighted average. Address the different treatment, if any, that must be given for periodic and perpetual inventory updating.arrow_forwardWhat are two advantages and disadvantages of the periodic inventory system?arrow_forward
- Describe costing inventory using last-in, first-out. Address the different treatment, if any, that must be given for periodic and perpetual inventory updating.arrow_forwardDescribe costing inventory using first-in, first-out. Address the different treatment, if any, that must be given for periodic and perpetual inventory updating.arrow_forwardWhich of the following is an advantage of the periodic inventory system? A. frequent physical inventory counts B. cost prohibitive C. time consuming D. real-time information for managersarrow_forward
- Inventory Costing: LIFO Refer to the information for Filimonov Inc. and assume that the company uses a perpetual inventory system. Required: Calculate the cost of goods sold and the cost of ending inventory using the LIFO inventory costing method.arrow_forward( Appendix 6B) For each inventory costing method, perpetual and periodic systems yield the same amounts for ending inventory and cost of goods sold. Do you agree or disagree with this statement? Explain.arrow_forwardWhen inventory items are highly specialized, the best inventory costing method is ________. A. specific identification B. first-in, first-out C. last-in, first-out D. weighted averagearrow_forward
- What are two advantages and disadvantages of the perpetual inventory system?arrow_forwardA JIT inventory management system maintains which of the following? a. Goods should be pushed through the system on a fixed schedule based on anticipated demand. b. Goods should be pulled through the system by present demand. c. Total inventory costs are minimized by balancing setup and carrying costs. d. Inventories are needed to avoid stock-out costs.arrow_forwardPrepare Journal entries to record the following transactions, assuming perpetual inventory updating, and last-in, first-out (LIFO) cost allocation. Assume no beginning inventory.arrow_forward
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