Could you show me an example of a perpetual inventory system?
submitted by aks

JillyBeanz

A perpetual inventory system is how companies keep track of their stock in real-time.

For example, every time you sell a tennis racquet your inventory is reduced immediately in your records.

Think of it like an online shopping cart that updates immediately when you add or remove items. That way, the business always knows exactly how much stock they have without doing a big assessment at the end of the period.

pheasant polish

In a perpetual inventory system, every purchase or sale is recorded right away. The term is perpetual inventory, but it's more like immediate inventory.

Say a store buys 100 cans of powdered milk at $10 each. The inventory account increases by $1,000 immediately. Later, if they sell 10 cans at $15 each, the system records the sale and reduces inventory by 10 units, and it may also record the cost of goods sold simultaneously. It's like a live ledger, so the inventory balance is always current.

pterry

Think of the perpetual system as an ongoing, real-time ledger for inventory.

When you purchase inventory, that immediately debits inventory and credits accounts payable. When a sale happens, it records both the revenue and reduces inventory, while also recognizing the cost of goods sold. This setup helps track inventory levels, costs, and profits without having to wait. It's really good for companies that are moving products often.