Periodic Inventory System Law and Legal Definition

Periodic inventory system is a method of valuing inventory for financial reporting purposes. In this method physical count of the inventory is performed at specific intervals. A day-to-day record of inventory changes is not required under this system. Under this system track recording of the inventory is done at the beginning of a period, the purchases made and the sales during the same period is recorded under the asset section of the balance sheet. Costs of materials used and costs of goods sold cannot be calculated until ending inventories.