Perpetual vs Periodic Inventory System
Our topic is about inventory system, Perpetual versus Periodic System.
Which inventory system to use?
With a perpetual system, inventory records are updated whenever a purchase or a sale is made.
In this way, the inventory records at any given time reflect how many of each inventory item should be in the warehouse. A perpetual system is most often used when each individual inventory item has a relatively high value or when there are large costs to running out of or overstocking specific items.
On the other hand, Periodic Inventory System, suitable for businesses rely on quarterly or yearly inventory counts to reveal which inventory items have been sold.
With a periodic system, inventory records are not updated when a sale is made; only the dollar amount of the sale is recorded. Periodic systems are most often used when inventory is comprised of a large number of diverse items, each with a relatively low value.
Choose your Inventory method that fits your business model.
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