Periodic inventory system
A periodic inventory system determines closing inventory at period end, normally using a physical count and valuation, rather than continuously updating a detailed inventory balance for every movement. Cost of sales is then calculated for the period. A discrepancy between a count and earlier records must be investigated; the count determines the closing quantity used in the calculation.
Worked example
A shop counts goods at year end and uses the value to calculate annual cost of sales.
Common mistake
Assuming the accounting records automatically provide a continuously updated quantity on hand.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Supporting | July 2027–August 2028 |
| ACCA | F2 | Supporting | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: period-end inventory records