Perpetual and periodic inventory system
Perpetual inventory system records every transaction. Inventory must be reordered once a year. Suitable for all kind of goods. Firm 1 buys from firm 2 Process:
Periodic inventory system records only cash transactions. Inventory must be reordered quarterly. Suitable only for invaluable goods. Process:
In periodic system there´s no cost of goods sold, inventory is only updated for financial statements.