Definition of Perpetual inventory:
A manual or automated inventory accounting system where inventory is accounted for in a real-time basis with adjustments, delivery, movements, and receiving being updated as they occur.
Perpetual inventory is a method of accounting for inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software. Perpetual inventory provides a highly detailed view of changes in inventory with immediate reporting of the amount of inventory in stock, and accurately reflects the level of goods on hand. Within this system, a company makes no effort at keeping detailed inventory records of products on hand; rather, purchases of goods are recorded as a debit to the inventory database. Effectively, the cost of goods sold includes such elements as direct labor and materials costs and direct factory overhead costs.
A perpetual inventory system is distinguished from a periodic inventory system, a method in which a company maintains records of its inventory by regularly scheduled physical counts.
How to use Perpetual inventory in a sentence?
- Perpetual inventory systems are in contrast to periodic inventory systems, in which reoccurring counts of products are utilized in record-keeping.
- The perpetual inventory method does not attempt to maintain counts of physical products.
- Perpetual inventory systems track the sale of products immediately through the use of point-of-sale systems.
Meaning of Perpetual inventory & Perpetual inventory Definition