Periodic inventory system in accounting is one that does not require a day to day record of inventory changes. Costs of materials used and costs of goods sold cannot be calculated until ending inventories, determined by physical count, are subtracted from the sum of opening inventories and purchases or costs of good manufactured in the case of a manufacturer. For calculating the cost of ending inventory, there are several methods available: LIFO, FIFO, and Weighted Average.
Therefore when using periodic accounting system instead of perpetual inventory system, no entries are made to adjust the inventory and cost of goods sold upon sale. These adjustments are made at the end of the accounting period. Inventory will be debited for the ending inventory amount and credited with the amount of beginning inventory. This will leave as a balance the amount of the ending physical inventory.