Explain the main differences between the two methods of accounting for inventory and how each method works. Which method of inventory has the All That Sparkles Store been using? Which inventory method would you recommend when the computerised accounting system is installed, and why?

The All That Sparkles Store sells expensive limited edition jewellery items and maintains its inventory records manually, keeping a separate card for each type of jewellery in store. Every time jewellery is purchased or sold, the card for that item is adjusted. Once a year, staff count the inventory of jewellery and compare the amount with the cards. Appropriate alterations are made for differences between inventory on hand and the cards. Prue Diamond is in charge of the shop and she has decided that it is time to install a computer-based system. She has heard that there are two ways to account for inventory but she is not sure which method she has been using and which method to use if she computerises the inventory records. You are an accounting student working part time in the shop, so Prue approaches you for help.