Wize University Introduction to Financial Accounting Textbook > Merchandising
Periodic Inventory System
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Periodic Inventory System
The periodic inventory system is a method of accounting for the company's inventory cost of sales that does not require continuous updates to these accounts. Instead, the company will periodically update inventory and record cost of sales, typically at the end of the accounting period.
Characteristics of Periodic Inventory
- Inventory and cost of goods not journalized during the accounting period.
- Requires an adjusting journal entry at the end of the period to update inventory and record cost of goods sold
- Used if the cost of maintaining a perpetual inventory system outweighs the benefit.
