Here below is an example of a few simple transactions in the T-accounts. Perpetual means constantly changing, or constantly being updated. After each transaction of buying or selling merchandise, the inventory asset (goods on hand) is updated.

You can trace through and see that we purchased merchandise for sale two times and we sold merchandise one time. “When we sell with perpetual we record it twice, once for the cost and once for the price”. Have a look at the orange transactions. The cost is recorded as in the Inventory Asset and the Cost of Goods Sold. The price is recorded in the Cash and Sales Income Accounts. The thing to particularly pay attention to is the recording of the cost. If we were just a service company we would only record a price and not a cost.

On Udemy.com, Mark Smolen’s course is called QuickBooks Online Inventory Management, and is about 4 hours long.