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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