Grade 12 Accounting Inventory Systems Notes pdf

December 11, 2023 ajiraforum Grade 12

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Grade 12 Accounting Inventory Systems Notes pdf

Grade 12 Accounting Inventory Systems Notes pdf This is for the Accounting Grade 12 course. Accounting Subject Revisions, Tests, Exams, and Assignments will benefit from the Grade 12 Accounting Inventory Systems Notes study material.

Accounting Grade 12 focuses on performance measurement as well as the processing and communication of financial information concerning economic sectors. This discipline ensures that ethical behavior, openness, and accountability are followed. As a Grade 12 Accounting student, you will be responsible for the logical, systematic, and accurate selection and recording of financial information and transactions, as well as the compilation, analysis, interpretation, and communication of financial statements and managerial reports to interested parties.

Periodic inventory system:

A periodic inventory system is an inventory system in which real time updating of inventory balances are not made. In fact, physical counting of inventory determines inventory position on completion of a specified period – usually once a quarter or once a year.

In a periodic inventory system, purchases of inventory are recorded in the purchases account in the books of the business. At the end of the specified period, when a physical count is done, the balance of purchases is moved to the inventory account. The cost of sales is subsequently determined by application of a mathematical formula:

Opening balance of inventory + Net Purchases – Closing balance of inventory = Cost of sales

Where: Net purchases= Purchases + Carriage on purchases – Returns – Other allowances

The periodic inventory system is preferred by smaller enterprises with lower small volumes where physical inventory counting is more feasible. The periodic inventory system is less reliable as it provides accurate information only at the time of physical count of inventory. Determination of cost of goods sold in between physical count periods is based on estimation which may lead to several errors. This system is also unable to determine inventory losses until actually identified in physical counting.

Perpetual inventory system:

A perpetual inventory system is one that continuously and in real time accounts for inventory movement. Purchases and sales of goods are recorded as they occur in a perpetual inventory system. For inventory management, this system employs point-of-sale systems and enterprise resource planning (ERP) systems.

Because purchases and sales of inventory are recorded in real time in a perpetual inventory system, the cost of products sold may be correctly determined at any point in time. The current inventory balance is also always available in the system. Because they have worked extensively with Inventory Systems, students are advised to use their Grade 11 class work and home work books.