Page 284 - Accounting Principles (A Business Perspective)

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In Chapter 6, the emphasis was on periodic inventory procedure. Under periodic inventory procedure, firms
debit the Purchases account when goods are acquired; they use other accounts, such as Purchase Discounts,
Purchase Returns and Allowances, and Transportation-In, for purchase-related transactions. Companies determine

cost of goods sold only at the end of the period as the difference between cost of goods available for sale and ending
inventory. They keep no records of the cost of items as they are sold, and have no information on possible inventory
shortages. They assume any goods not in ending inventory have been sold.

Accounting Principles: A Business Perspective 285 A Global Text