Name: Jyell D.

Cabigas Year & Section: 4-A

Instructor: Mr. Manolito Chosen II A. Ramos Course & Description: BSBA-FM

Pre-test

1. What is perpetual inventory system in accounting?

A perpetual inventory system is an inventory control in the way that it

records received or sold goods with the use of inventory system involving
automatic processes. During current trading perpetual inventory allows
records of changes in inventory. Furthermore, perpetual inventory system is
somewhat updating flow of inventory involving the sold goods and providing
accustomed and accuracy process.

Speaking of updating the flows in inventory, this how inventory system

work in real situation, it include point of sale updates system in inventory
levels which means if an inventory or goods is purchased, the inventory
control system linked to point of sale wherein system deducts the primary
inventory across all marketing channels directly. Another, the system
recalculated automatically if there is a goods or product being sold or
received. In order to maintain an important for planning of inventory at all
times, a perpetual inventory system will automatically change reorder points
when sale rise or fall. In addition, if ever the item reaches its reorder position
the system quickly created a single purchase order and delivers it to your
supplier without the need for involvement of the people. Furthermore,
products are scanned into inventory when they arrive.

2. What is periodic inventory system in accounting?

Periodic inventory system is one in which the inventory account is

updated at the end of financial period rather than after each buying and
selling. Within the accounting month, the said methodology allows company to
track its beginning and ending inventory. Furthermore, there is no continuing
monitoring of changes in a periodic inventory system, and the purchasing
account which is a record that list all inventory purchases and their expenses
is where the yearly inventory purchases are documented.

The method is somewhat suitable for small organizations that don’t keep a
lot of inventory on hand. Its simple to conduct a physical inventory in such a
business. In addition, it such also a lot easier to determined the cost of stuff
being sold during specific timeframes. Furthermore, companies that use the
periodic inventory system involve selling with few inventory units each month.
3. What are the differences between these two inventory system?
Differences
Perpetual Inventory Periodic Inventory
1. Suitable for Business 1. Normally suited for small
with high sales volume business like car
and multiple outlets. dealership or art gallery.
2. Uses Automation 2. Low sales volume
3. Having more accurate 3.Tracking inventory
tracking of inventory manually
levels.
4. Keep track of inventory 4.Lack of accurate
continuously information
5. few inventory

4. For you, what is the better inventory system between the two? Why?

Perpetual inventory, because the efficiency and accuracy towards work is

crucial. It is not only about being correct or precise, but it is somewhat a
degree to which the result of measurement, estimate, or specification
conforms to the correct value or a standard. To be accurate and precise at
work helps company grow, profit and function efficiently. Additionally, when it
comes to accurate work performance, firms all over the world will boost their
image and brand.

I would rather choose perpetual inventory, like how it continuously track

and updating the inventory, it is somehow essential due to the use of
technological aspects since it make inventories easily track. Particularly, it
prevent stock out and it allow business owners a more accurate
understanding of customers preferences. Additionally, it allows owners of
several sites to have a centralized inventory management system.
Furthermore, because each inventory item is kept on its own journal, it
provides higher reliability and making business owners with useful information
such as discounts, purchases and returns and the daily inventory counts are
reduce.