📗 What is a Perpetual Inventory System?

The Perpetual Inventory System continuously updates inventory records in real time. Every sale, purchase, or return is instantly recorded using point-of-sale (POS) systems, barcoding, or inventory management software.

🔸 Key Features:

  • Real-time inventory updates
  • Tracks every transaction immediately
  • Requires software or POS systems

🔸 Pros:

  • Provides accurate, real-time data

  • Detects inventory issues quickly (theft, shrinkage, errors)

  • Suitable for high-volume businesses or e-commerce

🔸 Cons:

  • Higher initial cost (software, scanners, integration)

  • Requires technical setup and training

  • May need regular audits to validate data

Assume you sell shoes.

🔸With Periodic:
  • Purchases are recorded without adjusting inventory.
  • A physical count at month-end reveals how many shoes are left.
  • COGS = Beginning Inventory + Purchases – Ending Inventory

🔸With Perpetual:
  • Every shoe sold updates inventory instantly.
  • At any time, the system shows how many shoes are in stock.
  • COGS is calculated immediately per sale.
🎥 Learn Through Video: Periodic vs. Perpetual Inventory System
Want to see these systems in action with examples?





📺 Watch this detailed explanation on YouTube: