PRACTICE TOPIC
Perpetual Inventory System
Practice Perpetual Inventory System with 11 accounting challenges on Accountely — instant IAS/IFRS-compliant scored feedback on every submission.
What perpetual inventory system covers
A perpetual system updates inventory and cost of goods sold continuously, with every sale generating two entries: one for the revenue and one moving cost out of inventory. Because the ledger carries a running balance, a physical count can be compared against it and any shrinkage identified as a separate adjustment.
These challenges cover the dual entries on sale, returns, and the reconciliation of the ledger balance to a physical count.
Where marks are usually lost
- Recording only the revenue entry on a sale and omitting the cost entry.
- Failing to adjust the ledger down to the counted quantity when they differ.
- Reversing only the revenue side of a sales return.
Further readingIAS 2: costing methods and NRV
11 Perpetual Inventory System practice challenges
TitleTypeDifficulty
Copperfield Hardware - Perpetual Merchandising Transactions (US GAAP) US GAAPJournaleasyRidgeway Garden Supply - A Perpetual System From Purchase to Shrinkage Multi-StatementmediumRedwood Athletics - Multi-Step Income Statement (US GAAP) US GAAPIncome StmtmediumCase Study: Brightford Stationers - One Month Through the Complete Accounting Cycle Multi-StatementhardBrightwater Retail - Perpetual Sales, Returns and Discounts (US GAAP) US GAAPJournalmediumAldermoor Trading - Multi-Step Income Statement (IFRS) Income StmtmediumLindale Bikes - Perpetual FIFO Through the Journal and the Inventory Account Multi-StatementmediumSandhill Traders - Perpetual Purchases, Returns and Discounts (US GAAP) US GAAPJournalmediumHarbor Freight Co. - Multi-Step Income Statement (US GAAP) US GAAPIncome StmtmediumVantage Electronics - Multi-Step Income Statement (US GAAP) US GAAPIncome StmtmediumAshford Trading - Multi-Step Income Statement (US GAAP) US GAAPIncome Stmtmedium