ACCOUNTING SYSTEMS FOR MERCHANDISE REGISTRATION
MOST COMMON ACCOUNTING SYSTEMS
Perpetual inventory method
ADVANTAGES
• It allows transactions to be broken
down into specific categories,
which facilitates a more detailed
analysis of financial operations.
• It allows more accurate tracking of
costs associated with each category
or area. This is especially useful for
identifying areas of overspending
or inefficiencies and taking
corrective action.
• By having specific analytical
categories, it facilitates greater
internal control by providing
greater visibility on the entity's
income and expenses.
It involves breaking down transactions into specific categories for detailed analysis. For example, sales may be recorded
separately based on product or geographic area. The analytical record helps to better understand the different aspects of
the business and facilitates cost analysis, income and expense tracking, and strategic decision making.
DISADVANTAGES ACCOUNTS THAT USE:
Warehouse
Debit: Credit:
• It may require the creation and Of the beginning inventory value. During the year.
maintenance of additional During the year. From the value of sales (at cost price).
accounts for each specific Of the value of purchases (at acquisition
Of the value of returns on purchases.
price).
category of analysis.
Of the value of the purchase expenses. Of the value of discounts on purchases.
• Detailed analysis means more
Of the value of returns on sales (at cost
time and resources dedicated to price).
tracking and recording The balance is ending inventory.
transactions in specific categories. Sales cost
• In some cases, the level of detail Debit: Credit:
provided by the analytical method During the year. During the year
may be excessive or unnecessary. Of the value of returns on sales (at cost
• This can lead to confusion or From the value of sales (at cost price)
price)
additional difficulties in the data The balance is the cost of goods sold
recording and analysis process, Sales
especially for smaller Credit: Debit:
organizations or with simpler During the year During the year
financial operations. Of the value of returns on sales (at sale
From sales value (at sale price)
price)
Of the value of rebates on sales Balance is net sales