Perpetual Inventory - Definition
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Accounting, Taxation, and Reporting
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Marketing, Advertising, Sales & PR
- Business Management & Operations
- Economics, Finance, & Analytics
- Professionalism & Career Development
What is Perpetual Inventory?
Perpetual inventory refers to a technique of accounting that records inventory purchases or sales immediately via the use of enterprise asset management software and computerized point-of-sale (POS) systems. The perpetual inventory provides an intricate view of changes in inventory with instant reporting of the inventory amount in stock.
A perpetual inventory doesnt require manual adjustment by the companys accountants, except to the point it differs from the physical inventory count as a result of breakage, theft, or loss. A POS system causes changes in inventory levels when inventory is reduced, and the cost of sales, an expense account, is increased anytime a sale is made.
Using a constant inventory system simplifies the use of economic order quantity (EOQ) by a company to buy inventory. EOQ is a formula used by managers to determine when to buy inventory. It considers the cost of ordering and holding inventory.