Question

Write down the differences between perpetual and periodic method with examples in your own words. (Do not copy from the internet)   

Answer 1

Lets try to understand these methods from the perspective of inventory observation

Under perpetual method, inventory is counted all the time in the floor. Counting of inventory items goes on continuously. For example includes Pharmacies which does perpetual counting of inventories. To keep a track of medicines, they need to count is it continuously.

Under periodic method, inventory is counted at a regular interval. Due to the nature of inventory it is not possible to count them on an on going basis and thus it is counted at every interval. For example -: In steel company periodic method is followed because manufacturing process needs to be stopped for inventory count. And manufacturing process can be stopped at an interval.