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Accounting for Merchandise Inventory

6 May, 2015 - 17:39

There are two systems commonly used to keep track of inventory: periodic inventory and perpetual inventory systems. In the periodic inventory system, revenue is recorded each time a sale is made. However, but the cost of goods sold is not determined until a physical inventory is taken. In the perpetual system, both sales amount and the cost of goods sold are recorded each time an item is sold. This makes it possible to know quantity and the value of inventory at all times.