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Perpetual Inventory System: Rona O. Tolentino Bsom-1D

The document discusses perpetual inventory systems which allow businesses to regularly update inventory records in real-time as purchases and sales are made through a computerized point-of-sale system. This allows for ongoing, accurate inventory information without time-consuming physical inventory counts. Perpetual inventory provides up-to-date inventory data instantly and reduces the need for physical counts, though it requires training employees and carries risks of errors affecting inventory levels. Most small and medium businesses should transition to perpetual inventory systems for more efficient inventory management than periodic inventory counts.

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104 views7 pages

Perpetual Inventory System: Rona O. Tolentino Bsom-1D

The document discusses perpetual inventory systems which allow businesses to regularly update inventory records in real-time as purchases and sales are made through a computerized point-of-sale system. This allows for ongoing, accurate inventory information without time-consuming physical inventory counts. Perpetual inventory provides up-to-date inventory data instantly and reduces the need for physical counts, though it requires training employees and carries risks of errors affecting inventory levels. Most small and medium businesses should transition to perpetual inventory systems for more efficient inventory management than periodic inventory counts.

Uploaded by

Rona
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PERPETUAL INVENTORY

SYSTEM
Rona O. Tolentino
BSOM-1D
PERPETUAL INVENTORY SYSTEM
• The perpetual inventory system involves more constant data updates and is a far
superior business management tool.
• A perpetual inventory system is a method of inventory management that records
real-time transactions of received or sold stock through the use of technology –
generally considered a more efficient method than a periodic inventory system
• Perpetual inventory is an accounting method that records the sale or purchase of
inventory through a computerized point-of-sale (POS) system. The perpetual
method allows you to regularly update your inventory records to help prevent
situations like running out of stock.
• You can easily record, view, and access changes in your inventory. You will have
ongoing, accurate results if you properly manage your perpetual inventory by
updating it on a regular basis.
Each time a transaction is made, the perpetual inventory system should update all the
relevant information to the company’s accounting system.
There are two primary inventory management systems that businesses use:
a perpetual inventory system or a periodic inventory system.
We’ll go through the features of both systems and outline why most small and medium
sized businesses should transition to a perpetual inventory accounting system – and
why the prospect of migrating is not as daunting as it may sound.
How does a perpetual inventory system differ
from a periodic system?
• A periodic inventory system relies on staff to undertake regular audits of stock to
update inventory information – which usually involves physically counting the
inventory available in storage, and comparing the outcome with sales data to check
for discrepancies. This is an enormously time consuming task, particularly for
businesses that deal with large volumes of stock. Nevertheless, businesses that don’t
handle many orders, such as car dealerships, may be better off using a periodic
inventory system.
• A perpetual inventory system keeps continual track of your inventory balances.
Updates are automatically made when you receive or sell inventory. Purchases and
returns are immediately recorded in your inventory accounts.
HOW PERPETUAL INVENTORY WORKS
• When you use perpetual inventory, the POS system
automatically makes changes to your inventory
levels. You can access your inventory reports online
anytime, making it easier to manage or purchase
inventory.
PERPETUAL INVENTORY PROS AND CONS
• Some pros of perpetual inventory include its ability to
provide up-to-date inventory information instantly, its easy
access system, and how it reduces the requirement to count
physical inventory.
• Some cons may include additional training for employees to
use the system, setup costs, and incorrect inventory levels
from mistakes such as entering the wrong quantity. If you or
your employees make mistakes while entering inventory,
fixing the error can be time-consuming.
THANK YOU!

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