Differences between periodic and perpetual journal entry

Both periodic and perpetual journal entry are important but there are some certain differences between periodic and perpetual journal entry which are discussed below:

Differences between periodic and perpetual journal entry

Periodic Journal Entry: The journal entry which records the financial events within an accounting period is called periodic journal entry. It always maintains a specific accounting period for determining a periodic financial statement.  It may use the gross method or net method, but always shows a single monetary value for each entry.

Example:

December 15, 2005, Purchase                     500

Cash                              500

December 30, 2005, Freight-in                    500

Cash                              500

December 31, 2005,        Cash                     500

Sales                              500

 

Perpetual Journal Entry:  The journal entry which records the financial events within a continuous accounting period is called perpetual journal entry. It always maintains a continuous accounting period for maintaining a perpetual inventory valuation. It may use a gross method or net method but always shows double monetary values for sales entry. It records all purchases items into merchandise inventory.

Example:

December 15, 2005

Merchandise Inventory                                500

Cash                                500

December 31, 2005

Cash                                 500

Sales                                                           500

Cost of Goods Sold             500

Merchandise Inventory                                  500

differences_between_periodic_and_perpetual_journal_entry

Differences between periodic and perpetual journal entry

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