Accounting and Finance for Lawyers

Periodic Inventory System

A periodic inventory system only logs COGS entries on fixed dates.

A purchase still immediately decreases Cash and increases a Purchases account by the purchase price.

A sale increases Cash and Sales (Revenue) by the sale price.

Then, on a fixed date, the Inventory is reassessed, and the cost of goods sold during the period is calculated by adding the beginning Inventory and the Purchases and subtracting the ending Inventory. (It's the consumed inventory.)