Question

Where can I find out whether a store use perpetual or periodic inventory system?

Answer 1

Whether a store uses perpetual or periodic inventory system can be found out by going through the store's books of accounts.

If the store records the cost of goods sold immediately after the sale takes place, the store is using perpetual inventory system. However, if the store records cost of goods sold at the end of the accounting period, the store is using periodic inventory system.

For example, if the store debits cost of goods sold and credits merchandise inventory on the date of each sale, the store is using perpetual inventory system. However, if such entry is not found in the store's journal after each sale, the store is using periodic inventory system.