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15RQ

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Horngren'S Financial And Managerial Accounting
Found in: Page 357

Short Answer

When using the periodic inventory system, which inventory costing method(s) always produces the same result as when using the perpetual inventory system?

FIFO method produces the same result under both – periodic and perpetual inventory systems.

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Step by Step Solution

Periodic inventory system

The periodic inventory system is a method of computing the cost of goods sold and ending inventory at the end of the period. Unlike the perpetual system, the period system only computes the value of inventory at the end of the period and not after every purchase.

The periodic inventory system is useful for small businesses that have less no. of inventories.

Same inventory value under both periodic and perpetual method

Different method of inventory valuation produces different results under both the inventory system. But there is one method that gives the same value o inventory under bot the system which is the “Fist in First out (FIFO)” method.

Under this method, the ending inventory is valued at the most recent price. So it does not matter how many times the inventory was acquired during the period as the ending inventory would always be valued on the recent prices

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