What is a period inventory system?
A period, or periodic, inventory system is one of many ways companies keep track of their inventory. While not as up to date as some systems, a periodic inventory can keep bookkeeping efforts to a minimum.MethodAccording to accountingaide.com “Under the periodic inventory system, physical counts of inventory are periodically conducted and then the accounts are brought up to date.” The frequency of an inventory count is dependent upon the turn around a company may expect.BenefitsWhen using a periodic system, there is no need to keep a day-to-day log of every purchase and sale. At the end of your set interval you can take the inventory from the previous count, add any purchases made in the interim and subtract the current inventory to determine number of goods sold.DisadvantagesA periodic system makes no allowances for items stolen or lost between counts unless a specific notation was made at the incident. All you know is what you had last time you made a count and what you have now.Type
