basic concepts of inventories

First-in First-out (FIFO)
Under FIFO, it is assumed that items purchased first are sold first.
Last-in First-out (LIFO)
Under LIFO, it is assumed that items purchased last are sold first.
Perpetual Inventory System
Perpetual inventory system updates inventory accounts after each purchase or sale.       Inventory subsidiary ledger is updated after each transaction.       Inventory quantities are updated continuously.
Periodic Inventory System
Periodic inventory system records inventory purchase or sale in "Purchases" account.       "Purchases" account is updated continuously, however, "Inventory" account is updated on a periodic basis, at the end of each accounting period (e.g., monthly, quarterly)       Inventory subsidiary ledger is not updated after each purchase or sale of inventory.       Inventory quantities are not updated continuously.       Inventory quantities are updated on a periodic basis.