PRACTICE TOPIC
Periodic Inventory System
Practice Periodic Inventory System with 10 accounting challenges on Accountely — instant IAS/IFRS-compliant scored feedback on every submission.
What periodic inventory system covers
Under a periodic system, inventory is not tracked continuously. Purchases are accumulated in a purchases account, and cost of goods sold is derived only at period end as opening inventory plus purchases less closing inventory. It is simpler to operate but gives no running record, so shrinkage is buried inside cost of goods sold rather than identified.
Challenges here cover purchase and sale entries, the closing adjustment, and the cost of goods sold computation.
Where marks are usually lost
- Recording a cost of goods sold entry at the point of sale — that belongs to a perpetual system.
- Leaving out the closing inventory adjustment, so cost of goods sold is overstated.
- Debiting inventory rather than purchases when goods are bought.
Further readingIAS 2: costing methods and NRV
10 Periodic Inventory System practice challenges
TitleTypeDifficulty
Beaumont Wholesale - Periodic System: Journal, Cash Ledger and Trial Balance Multi-StatementmediumQuillfield Paper Co. - Adjusting the LIFO Reserve (US GAAP) US GAAPJournalmediumKaberi Textile Ltd. - Multi-Step Income Statement with a Periodic COGS Schedule US GAAPIncome StmthardMaplewood Outfitters - Multi-Step Income Statement with a Periodic COGS Schedule Income StmtmediumMarston Cycles - FIFO and Weighted Average on the Same Purchases Multi-StatementmediumHarborview Trading - Periodic System: Income Statement and Balance Sheet Multi-StatementhardWestcombe Hardware - Estimating Inventory Destroyed by Fire (Gross Profit Method) Multi-StatementmediumOakridge Ltd. - Income Statement Income StmtmediumHarrowgate Stores - An Inventory Error That Corrects Itself Multi-StatementmediumThornbury Imports - Periodic Multi-Step Income Statement (IFRS) Income Stmtmedium