1. What is Periodic Inventory Calculation?

Periodic Inventory Calculation is an accounting method that determines ending inventory value at the end of an accounting period using the formula: Beginning Inventory + Purchases - Cost of Goods Sold.

2. How Does the Calculator Work?

The calculator uses the periodic inventory formula:

Where:

• Beginning — Value of inventory at the start of the period
• Purchases — Total value of inventory purchased during the period
• COGS — Cost of goods sold during the period

Explanation: This formula provides the ending inventory value by accounting for all inventory movements during the accounting period.

3. Importance of Inventory Calculation

Details: Accurate inventory calculation is crucial for financial reporting, tax purposes, and business decision-making. It helps determine the cost of goods sold and the value of remaining inventory.

4. Using the Calculator

Tips: Enter all values in currency format. Ensure beginning inventory, purchases, and COGS are valid non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between periodic and perpetual inventory?
A: Periodic inventory is calculated at the end of a period, while perpetual inventory is continuously updated with each transaction.

Q2: When should I use periodic inventory calculation?
A: This method is typically used by smaller businesses or for products with lower value where continuous tracking isn't practical.

Q3: What currency should I use?
A: Use your local currency. The calculator works with any currency as long as all values are in the same currency.

Q4: Can ending inventory be negative?
A: No, ending inventory should not be negative. If the calculation results in a negative value, it indicates an error in the input data.

Q5: How often should I calculate ending inventory?
A: Typically calculated at the end of each accounting period (monthly, quarterly, or annually) depending on your business needs.