Readysell runs a Perpetual Stock Inventory System, not a Periodic Inventory system. The periodic and perpetual inventory systems are different methods used to track the quantity of goods on hand. |
Under the perpetual system, there are continual updates to either the general ledger or inventory journal as inventory-related transactions occur. Conversely, under a periodic inventory system, there is no cost of goods sold account entry at all in an accounting period until such time as there is a physical count, which is then used to derive the cost of goods sold.
The difference between the periodic and perpetual inventory systems involves the general ledger account Stock on Hand -Inventory.
Perpetual means 'continuous'. This is a system where a business keeps continuous, moment-to-moment records of the number, type and value of stock that is has at the business.
Periodic means where one does periodic inventory counts (such as once a month, or at the beginning and end of each year) and does not have an accurate record of the stock in between these points.
In a Periodic System the account Inventory (stock on hand) will:
In a Perpetual System the account Stock on hand (Inventory) will: