Periodic inventory is an accounting system that large organizations with high volumes of products use to keep track of product costs and revenues. Rather than constantly update the books with each sale, the business keeps several different accounts that keep track of sales, the cost of goods sold, purchases and other key information. At the end of the period, the business combines these accounts to create final inventory numbers and sales figures. While this works well when a business has a high rate of sales, it can also pose problems.