periodic inventory system formula

periodic inventory system formula is used to calculate the cost of goods sold (COGS) under a periodic system. The formula is: Beginning Inventory + Purchases – Ending Inventory = COGS. This method requires businesses to conduct physical inventory counts at regular intervals, such as monthly or quarterly. It’s often used by smaller businesses or those with low inventory turnover. The periodic system is less costly to implement than a perpetual one but lacks real-time data, making it essential to track inventory changes accurately during each reporting period.