Accounting Dictionary

Perpetual Inventory

When you use perpetual inventory you count your inventory every single day. On any given day you know exactly how much inventory you have.

Most companies know how much inventory they bought and how much they sold. But they don’t know how much they have because they don’t know how much was stolen. Perpetual inventory is used by companies who need to know immediately if something was stolen. These companies sell very few items and everything they sell is very expensive. A car dealership would use perpetual inventory, counting their cars every single day. If one was stolen in the night they need to make an insurance claim immediately.

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