Final answer:
In a periodic inventory system, a company's records show the quantity of inventory on hand only at periodic intervals. These records are used to determine the cost of goods sold and the ending inventory for the period.
Step-by-step explanation:
In a periodic inventory system, a company's records show the quantity of inventory on hand only at periodic intervals, such as the end of the month, quarter, or year. This is in contrast to a perpetual inventory system, where the quantity of inventory is continuously updated.
With a periodic inventory system, the company typically counts its physical inventory at the end of the accounting period and adjusts its records to reflect the actual count. This count is then used to determine the cost of goods sold and the ending inventory for the period.
For example, Swifty Company may conduct a physical inventory count at the end of the month and record the quantities of each item on hand. These quantities would be used to calculate the cost of goods sold and the value of the ending inventory for that month.