Differences in Periodic and Perpetual Methods

Periodic Method

           Periodic methods or also called physical methods, if there is an activity to purchase goods for resale, the journal is to debit the purchase account and make cash credit (if paid in cash) and trade debt (if paid for credit).

In the event of a sales activity, the journal is to debit the accounts receivable or cash account and to credit the sales account. To identify the ending inventory, it is necessary to do an inventory or stock taking at the end of the period.


 Perpetual method

           The perpetual method system is known as the book method. This perpetual method has a system that records every inventory that comes out and goes into a notebook. Each type of item is entered into an inventory card system, and in the bookkeeping record using an inventory auxiliary account. Records of details in the helper can be monitored through the control of inventory accounts in goods into large notebooks. The account used for inventory recording activities consists of several columns that can be used to record purchasing activities, sales activities and inventory balances. All changes to inventory are accompanied by recording activities in the inventory account so that inventory balances can be controlled and known at any time by looking at the column on the balance in the inventory account. Each column needs to be broken down again in order to quantity and quality of the income price. The use of the perpetual method will simplify the balance sheet and income statement in the short term. This is because there is no need to procure physical calculations to determine the amount of final inventory. Common features of this perpetual system are:

    On the purchase of goods recorded by compiled in a notebook by debiting the inventory account.
    At cost of goods sold is calculated every time a sales transaction and arranged through a notebook by debiting inventory through a HPP account.
    Inventory in the form of a control account that is equipped with an auxiliary book through inventory containing the composition of records in each type of inventory. The inventory logbook states the quantity and price of income for each type of item contained in the inventory

The most prominent differences between the 2 methods are:

•     In the periodic method there is no trading account inventory account and cost of goods sold.

•     In the Perpetual method there is no Purchase Account and Purchase Return Account,