Identify if its Periodic Inventory System or Perpetual Inventory System

1. There are continual updates to either the general ledger or inventory journal as inventory-related transactions occur.

2. There is no cost of goods sold account entry at all in an accounting period until such time as there is physical count, which is then used to derive the cost of goods sold.

3. This system of inventory advices to use computer systems instead of manual recording.

4. This system of inventory allows for the use of manual record keeping for very small inventories.

5. The cost of goods sold is calculated in a lump sum at the end of the reporting period, by adding total purchases to the beginning inventory and subtracting ending inventory.

6. There are continual updates to the cost of goods sold account as each sale is made.

7. It is impossible to use cycle counting since there is no way to obtain accurate inventory counts in real time.

8. Inventory purchases are recorded in either the raw materials inventory account or merchandise account

9. All purchases are recorded into a purchase asset account and there are no individual inventory records to which any unit-count information could be added.

10. It is nearly impossible to track through the accounting records to determine why an inventory-related error of any kind occurred, since the information is aggregated at very high level.

11. Investigation to track through accounting records are easier since all transactions are available in detail at the individual unit level.