Final answer:
In a periodic inventory system, inventory is not continuously tracked. Instead, a physical count of inventory is done at the period's end, and the COGS is calculated by adjusting for purchases and the ending inventory.
Step-by-step explanation:
Under the periodic inventory system, an accurate up-to-date record of inventory is not maintained on a continuous basis throughout the financial period. Instead, at the end of each period, typically a month, quarter, or year, a physical inventory count is conducted. The cost of goods sold (COGS) for the period is then calculated by adding purchases to the opening inventory and subtracting the closing inventory. This method is in contrast to the perpetual inventory system where inventory records are updated in real-time as transactions occur.