Perpetual Inventory - Purchasing Summary definitions Flashcards
Perpetual Inventory - Purchasing Summary definitions
You can tap to flip the card.
Control buttons has been changed to "navigation" mode.
1/13Skip to main content
Perpetual Inventory System
A method where inventory records are updated continuously for each purchase and sale, providing real-time inventory balances. Inventory Account
A ledger account tracking the value of goods held for sale, reflecting increases and decreases from purchases and sales. Beginning Balance
The amount of inventory on hand at the start of an accounting period, serving as the starting point for calculations. Purchases
Additions to inventory during a period, representing goods acquired for resale and increasing the inventory account. Purchase Discounts
Reductions in the cost of inventory received for early payment to suppliers, decreasing the inventory account. Purchase Returns and Allowances
Deductions from inventory for goods returned to suppliers or price reductions for defective items, lowering inventory value. Cost of Goods Sold
The expense representing the cost of inventory sold during a period, reducing the inventory account. Ending Balance
The final value of inventory remaining at the end of a period after accounting for all additions and subtractions. T-Account
A visual tool used to represent increases (debits) and decreases (credits) in an account, aiding in inventory calculations. Debits
Entries on the left side of a T-account, typically representing increases to asset accounts like inventory. Credits
Entries on the right side of a T-account, usually indicating decreases to asset accounts such as inventory. Accounts Payable
A liability account for amounts owed to suppliers, not directly affecting inventory calculations in this context. Base Equation
A formula used to determine ending inventory: Beginning Balance + Purchases - (Discounts + Returns + COGS) = Ending Balance.
06:37
