Q. Example of Periodic inventory procedure?

Periodic inventory procedure Merchandising companies selling small unit value merchandise such like nuts and bolts Christmas cards nails or pencils that haven't computerized their inventory systems often find that the extra costs of record-keeping under perpetual inventory procedure in excess of outweigh the benefits. These merchandising companies regularly use periodic inventory procedure.

Under periodic inventory procedure, companies do not use the Merchandise Inventory account to record each purchase and sale of merchandise. In its place a company corrects the balance in the Merchandise Inventory account as the result of a physical inventory count at the end of the accounting period. As well the company usually doesn't maintain other records showing the exact number of units that must be on hand. Even though periodic inventory procedure reduces record-keeping it as well reduces control over inventory items.