![]() All inventory purchases are recorded in the Purchases account, which is shown in the COGS section of the income statement. ![]() Here are the key features of a periodic system: It doesn’t require constant recordkeeping and it makes everyday transactions easier, making it great for self-employed individuals and solopreneurs. The periodic inventory system is the easiest system to implement for small businesses. You can visit our in-depth analysis of the average cost method and LIFO method to see how they’re implemented with both periodic and perpetual systems. In the following section, we’ll illustrate the difference between the periodic inventory system and perpetual inventory system by showing the journal entries while using the FIFO cost flow assumption. Perpetual vs Periodic Inventory at a Glance If a business has a stable level of inventory, then purchases are very close to COGS and the simple periodic method will net the same results as the more time-consuming perpetual method.
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