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Firstly, Accounting System is a process to record, summary and report any business transaction in terms of money and quantity and then analysis of all such reports.
Now coming to Inventory Accounting System, its an Accounting System used to report different aspects of Invetory of any organization.
So Nasreen, your point is concerned with the Inventory Management System, a whole science of Policies & Procedures in any organization. Coming to the point, please note down that there is a world of difference between your both terminology. One is to related to costs and the other is related to chronological flow of invenotry i.e. quantitatives.
By definition, Inventory accounting systems are the methods to identify the cost of purchase , cost of inventory and cost of goods sold. Whereas the Invertory cost flow methodes are the way which can calculate the cost of purchase and cost of goods sold .
Mainly two types of Inventory accounting systems are mostly known including Periodic inventory system and Perpetual Inventory system .
Under the periodic inventory system there is no way to tell from the general ledger accounts the amount of inventory or the cost of goods sold.
However, under the perpetual system there is a Cost of Goods Sold account that is debited at the time of each sale for the cost of the merchandise that was sold. Under the perpetual system a sale of merchandise will result in two journal entries: one to record the sale and the cash or accounts receivable, and one to reduce inventory and to increase cost of goods sold .
There are 6 methods of Inventory cost flow including:
1. Periodic FIFO
2. Periodic LIFO
3. Periodic Average
4. Perpetual FIFO
5. Perpetual LIFO
6. Perpetual Average
Inventory accounting systems are the methods to identify the cost of purchase , cost of inventory and cost of goods sold. Whereas the Invertory cost flow methodes are the way which can calculate the cost of purchase and cost of goods sold .
Mainly two types of Inventory accounting systems 1) Periodic inventory system 2) Perpetual Inventory system .
Under the periodic inventory system there is no way to tell from the general ledger accounts the amount of inventory or the cost of goods sold.
Under the perpetual system there is a Cost of Goods Sold account that is debited at the time of each sale for the cost of the merchandise that was sold. Under the perpetual system a sale of merchandise will result in two journal entries: one to record the sale and the cash or accounts receivable, and one to reduce inventory and to increase cost of goods sold .
The Inventory cost flow methods are Six types
1. Periodic FIFO2. Periodic LIFO3. Periodic Average4. Perpetual FIFO5. Perpetual LIFO6. Perpetual Average
