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This guide explains the perpetual inventory accounting system, highlighting how purchases are recorded in the inventory account. It covers the use of Sales, Cash, and Accounts Receivable (AR) to document sales, along with the management of Cost of Goods Sold (COGS) and Monthly Inventory (MI). Key processes such as updating COGS and MI after transactions, handling purchase returns, discounts, and freight costs, and maintaining distinct accounts for these elements are also discussed. Learn to streamline your inventory management efficiently!
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Periodic Perpetual Purchases are put in inventory account Use Sales, Cash &/or AR plus COGS and MI to record sales MI and COGS updated after each transaction Purchase returns, discounts, and freight in all go into inventory Records all purchases and sales of every transaction, but updates both inventory and cogs after every transaction • Purchases are put in purchases account • Use only Sales, Cash, &/or AR to record sales • MI and COGS updated at end of the month • Purchase returns, discounts and freight in have their own accounts • Records all purchases and all sales of every transaction, but records them differently than perpetual
