Periodic Inventory - Purchasing Summary definitions Flashcards
Periodic Inventory - Purchasing Summary definitions
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Periodic Inventory System
Method where inventory and COGS are updated at period end, relying on physical counts rather than continuous tracking. Perpetual Inventory System
Approach where inventory and COGS accounts are updated in real time with each transaction throughout the period. Cost of Goods Sold
Total cost of inventory sold during a period, calculated at period end in a periodic system using inventory balances and adjustments. Purchases Account
Temporary account accumulating the cost of inventory bought during the period, not directly affecting inventory until period end. Purchase Discounts
Reductions in purchase cost due to early payment or other incentives, subtracted from total purchases when calculating COGS. Purchase Returns and Allowances
Deductions from purchases for returned goods or price adjustments, reducing the total cost of inventory acquired. Physical Inventory Count
Process of manually counting all inventory items at period end to determine the actual ending inventory balance. Beginning Inventory
Value of inventory on hand at the start of the accounting period, serving as the starting point for COGS calculation. Ending Inventory
Value of inventory remaining at period end, determined by physical count and used to compute COGS. T-Account
Visual tool used to track increases and decreases in an account, helping organize inventory calculations. Inventory Balance
Amount representing the value of goods available for sale at a specific point, adjusted for purchases, returns, and COGS. Base Equation
Formula combining beginning inventory, purchases, returns, discounts, and ending inventory to solve for COGS. Accounts Payable
Liability account for amounts owed to suppliers, not directly involved in COGS calculation in the periodic system.
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