Under the periodic inventory system, a physical inventory is taken to determine the cost of the inventory on hand and the cost of the goods sold.

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Under the periodic inventory system, a physical inventory is taken at a specific point in time to determine the quantity and cost of the inventory on hand. This information is used to calculate the cost of goods sold during the period. In contrast, under the perpetual inventory system, inventory quantities and cost of goods sold are continually updated using point-of-sale data and other inventory transactions.

Under the Periodic Inventory System, a Physical Inventory Is Taken