20 The biggest difference between a periodic and perpetual i

20. The biggest difference between a periodic and perpetual inventory system? A. Uader the perlodic inventory system, the purchase of inventory will be debited to the Purchases account. B. Under the periodic inventory system, no journal entry is recorded at the time of the sale C. D. Under the perpetual inventory systems there is no purchase account to record acquisitions E. All of the answers are correct. of inventory for the cost of the inventory. allowances and discounts are calculated at the end of the month. of raw materials. Under the periodie inventory system, all adjustments such as purchases returns and

Solution

Solution

A) Under the Periodic Inventory system, the purchase of inventory will be debited to the Purchases account.

B) Under the Periodic Inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory.

Explanation

The inventory system which we will use depends upon the size of the organization. The organizations whose size is larger mostly prefer Perpetual Inventory system over the periodic inventory system. The smaller size organizations prefer periodic inventory system .Under the Periodic Inventory system, the purchase of inventory will be debited to the Purchases account whereas under Perpetual Inventory system the merchandise inventory is debited. Under Periodic Inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory whereas under perpetual inventory system entry is recorded for the cost of the goods sold.