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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Explain the differences between the perpetual and periodic inventory systems of inventory quantity and cost.

To determine

Identify the differences between the perpetual and periodic inventory systems on the basis of quantity and cost of the inventory.

Explanation

Periodic inventory system:

The method or system of recording the transactions related to inventory occasionally or periodically is referred as periodic inventory system.

Perpetual inventory system:

The method or system of maintaining, recording, and adjusting the inventory perpetually throughout the year, is referred to as perpetual inventory system.

The differences between the perpetual and periodic inventory systems on the basis of quantity and cost of the inventory are as follows:

  • Record of inventory:

    The perpetual inventory system keeps a continuous record of the physical quantity of the inventory. The periodic inventory system keeps a periodic record of the physical quantity and cost of the inventory...

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