What is the difference between a periodic inventory system and a continuous inventory system


Periodic Inventory

Continuous inventory

The purpose of the inventory

Extract the cost of goods at the end of the period to extract the cost of sales and thus know the net income realized at the end of the period

Match the actual stock balance with the book balance

Varieties of goods

This system is applied in companies with multiple varieties and low value

This system is applied in companies that have few varieties and are expensive

Achieve censorship

Control is difficult to achieve on a continuous basis, because the inventory is only once a year

Effective control continuously achieves a merchandise account

Ease of use

Easy to use when recording goods operations

It is difficult to use and record the operations of the goods when using the manual system in the recording, but if the appropriate accounting software and barcode system becomes easy to use

Determine the cost of sales

The cost of sales can only be determined when the inventory, and the inventory according to this system is done once a year

The cost of sales can be determined after each sale occurs