Periodic Inventory


DEFINITION of 'Periodic Inventory'

A method of inventory valuation for financial reporting purposes where a physical count of the inventory is performed at specific intervals. This accounting method for inventory valuation only keeps track of the inventory at the beginning of a period, the purchases made and the sales during the same period and is recorded under the asset section of the balance sheet.

BREAKING DOWN 'Periodic Inventory'

With this valuation method, it is much harder to track which individual items were destroyed or stolen, but a cross-reference can be made with the sales revenue to get a rough estimate of what was sold versus what was not. Many see this method as being inferior to the perpetual inventory method, which keeps track of inventory at the point of sale.

This system is typically used by small businesses that can't afford or don't need an electronic tracking system (i.e. the bar code system).

  1. Carrying Costs

    The price of holding, or "carrying," inventory. Carrying costs ...
  2. Inventory

    The raw materials, work-in-process goods and completely finished ...
  3. Beginning Inventory - BI

    The book value of goods, inputs or materials available for use ...
  4. Cost Of Goods Sold - COGS

    Cost of goods sold (COGS) are the direct costs attributable to ...
  5. Ending Inventory

    The value of goods available for sale at the end of the accounting ...
  6. Inventory Turnover

    Inventory Turnover is a ratio showing how many times a company's ...
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  3. Do working capital funds expire?

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  4. How much working capital does a small business need?

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