[turtle5a1]

Hey guy, if I am giving a trial balance or a balance sheet, how to I know whether is it on a perodic or perpetual system. What do I look out for. Advice. Thanks.

[morgaine300]

Looking at just a balance sheet you really can't tell.

The difference between the two methods are in whether all puchases and sales go directly in and out of the merchandise inventory account (perpetual), or whether all purchases are gathered into a purchases account and then an adjustment made at the end of the period to update inventory (periodic).

Perpetual won't have a purchases account. Since that isn't a balance sheet account, it won't be there, but you will find it on a trial balance. (The only thing that shows on the balance sheet is the inventory, which would have already been updated for periodic and will look the same as if you did perpetual.)

[turtle5a1]

Looking at just a balance sheet you really can't tell.

The difference between the two methods are in whether all puchases and sales go directly in and out of the merchandise inventory account (perpetual), or whether all purchases are gathered into a purchases account and then an adjustment made at the end of the period to update inventory (periodic).

Perpetual won't have a purchases account. Since that isn't a balance sheet account, it won't be there, but you will find it on a trial balance. (The only thing that shows on the balance sheet is the inventory, which would have already been updated for periodic and will look the same as if you did perpetual.)

Thanks for the information.

[morgaine300]

You're welcome. :-)