Hi, i'm in the business of trading and developing properties, would it be more beneficial to adopt a periodic or perpetual inventory system? Since there isnt much stock to do a stock count (unlike retail, wholesaler etc), would it be better to use a perpetual inventory system to make the accounts simpler?
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Perpetual or periodic inventory system?
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Depending on your accounting software, do whatever is easiest for you.
If there isn't much difference and I had to make a choice I'd go with perpetual - it would be marginally easier for your accountant at year end (assuming you correctly process transactions) and would help you more accurately estimate your profit (and tax liability) throughout the year, but it really won't make a huge difference.
Just make sure you're completely clear about which 'inventory item' your expenses relate to, so you move the correct amounts to COGS when a sale occurs.AAT Accounting Services - Property Specialist - [email protected]
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