💡The perpetual inventory system updates inventory and cost of goods sold accounts in real-time, while the periodic inventory system updates them periodically.
🔢In the perpetual inventory system, each sale triggers a computation of the cost flow, allowing for precise inventory valuation methods.
📅The periodic inventory system updates inventory and cost of goods sold accounts at specified intervals, which may be daily, weekly, or monthly.
⚖️Inventory valuation methods, such as FIFO (first in, first out), LIFO (last in, first out), and weighted average, can be applied in both perpetual and periodic inventory systems.
📊The choice between the perpetual and periodic inventory system depends on the nature of the business and the level of real-time inventory tracking required.