ACC 281 Week 1 DQ2 - 7411

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Week 1 DQ2

What types of companies use periodic inventory? What types of companies use perpetual inventory? What are the similarities and differences between periodic and perpetual inventory systems? How does each method affect the inventory and cost of sales calculations?

What types of companies use periodic inventory?
 
The periodic inventory system is generally used by small businesses that have minimal inventories. 

What types of companies use perpetual inventory?

Perpetual inventory systems are used by companies that have larger inventories such as Wal-Mart and Nordstrom’s.   

What are the similarities and differences between periodic and perpetual inventory systems?
 
Both systems are used to calculate the cost of goods sold, but the perpetual system keeps track of inventory daily while the periodic is only used when inventory counts are being performed. 

How does each method affect the inventory and cost of sales calculations?

A perpetual inventory system provides better control over inventories than a periodic system. Since the inventory records show the quantities that should be on hand, the company can count the goods at any time to see whether the amount of goods actually on hand agrees with the inventory records. If shortages are uncovered, the company can investigate immediately. 

 

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Week 1 DQ2

What types of companies use periodic inventory? What types of companies use perpetual inventory? What are the similarities and differences between periodi