Final answer:
Perpetual accounting is an inventory management method involving continuous updating of inventory accounts as transactions occur. It uses scanning technology and inventory management software, enabling more accurate financial information. McGraw Hill provides resources with guidance on this process, including detailed guides and tutorials.
Step-by-step explanation:
The term 'perpetual accounting' refers to a method of inventory management where inventory accounts are updated continuously as transactions occur. This is in contrast with periodic accounting, where the inventory is updated at intervals, such as at the end of each financial period. Perpetual accounting typically involves the use of scanning technology and inventory management software, which tracks the purchase and sales of goods in real time, allowing for more accurate and current financial information.
When a business sells a product under the perpetual system, two accounting entries are made: one to record the revenue from the sale, and another to decrement the inventory and record the cost of goods sold. Similarly, when new inventory is purchased, an entry is made to increase the inventory account and to record the related expense. McGraw Hill's approach to perpetual accounting would involve following the specific guidance and practices outlined in their textbooks and software, which may provide tools and frameworks for implementing this accounting process.
To learn more about perpetual accounting, students could access resources from McGraw Hill, which often include comprehensive guides, step-by-step tutorials, and details on their specific approach to the continuous accounting process. Such resources would likely cover the principles of journal entries, inventory tracking, and how to review and interpret the ongoing financial data.