Inventory accounting system

Periodic Inventory System
In a periodic inventory system, the company calculates the cost of goods sold at the end accounting period. During the accounting period was recorded on the purchase or reception, which will be used as a basis for determining the value of inventories. In Generally, this method is used in companies that sell merchandise at a price relative inexpensive, but high sales levels. With this method, a physical count of inventory is determined based on a periodic basis. Therefore, this system is also called a physical inventory system. Within this system of purchase will be added to the value of beginning inventory, ending inventory is calculated and determined its value, then the difference between the beginning inventory plus purchases with a value of ending inventory
recorded as cost of goods sold.

1) Method of First In First Out (FIFO)
The physical count of inventory at the end of the December 31 show that 400 units unsold. The calculation of cost of goods sold of the 600 units have been sold can be presented as follows

2) Method of Last In First Out (LIFO)
In the calculation method, it is assumed that the merchandise removed from last purchase. Therefore, there is  inventory in warehouse must be considered derived from items which first entered into the warehouse. Here's an example calculation. It should be noted that these figures are calculated according to the LIFO periodic system has not necessarily the same as the figures are calculated according to the perpetual system. These differences are caused by the composition of ending inventory in a perpetual system is determined based on the calculation of transaction per transaction.

3) Method of Average
By using the average method in the periodic system, the average price will be calculated for all purchases during the accounting period plus the initial inventory. The average base price is used to calculate the value of ending inventory and cost of goods sold. The calculation of the cost of sales as follows

Perpetual Inventory System
In this method of inventory is calculated and determined each transaction receipt or expenditures. Accounting system is a hallmark of good cost accounting, because the using the value of inventories could be detected  and determined at any time and prices of goods sold can be determined at the time of sale.