Question

Q. Periodic versus Perpetual Inventory Systems
Explain the essential differences between perpetual and periodic inventory systems. Give your own examples of products/situations suited to each.

Answer 1

Diffrence between Perpetual Inventory system and periodic inventory system

1. In perpetual inventory system inventory records update regularly and but under periodic inventory system record update periodically means update at the end of particulars period.

2. under perpetual inventory system inventory value remain unsold calculate on the base of available inventory records but periodically inventory system generally inventory value calculate based on physically counting.

3. Perpetual inventory system is costly as regular inventory update but periodic inventory system is not costly as inventory update maintian periodically.