Periodic and Perpetual Inventory Systems

#periodicvsperpetual #inventorysystems #inventorymanagementsystem
In this video, we're going to be discussing the differences between periodic and perpetual inventory systems. We'll be looking at the benefits and drawbacks of each system and which one is better for your business.
A periodic inventory system and a perpetual inventory system are two methods used by businesses to track their inventory levels. The main difference between the two systems is the frequency with which inventory levels are updated.
In a periodic inventory system, inventory levels are updated at specific intervals, such as daily, weekly, or monthly. At the end of each period, the business counts its inventory and records the inventory levels in its accounting records. The cost of goods sold (COGS) is calculated based on the change in inventory levels from one period to the next.
In a perpetual inventory system, inventory levels are updated continuously as inventory transactions occur. Each time a product is sold, the system records the sale and updates the inventory levels in real-time. This allows the business to always have an up-to-date picture of its inventory levels.
The key differences between the two systems are as follows:
Frequency of updates: In a periodic inventory system, inventory levels are updated periodically (e.g., weekly or monthly), whereas in a perpetual inventory system, inventory levels are updated in real-time.
Accuracy: A perpetual inventory system provides more accurate inventory levels because inventory transactions are recorded in real-time, whereas in a periodic inventory system, inventory levels are only updated periodically.
Cost of Goods Sold (COGS): In a periodic inventory system, the COGS is calculated based on the change in inventory levels from one period to the next. In a perpetual inventory system, the COGS is calculated based on the cost of each individual sale as it occurs.
Overall, a perpetual inventory system is generally considered to be more accurate and efficient than a periodic inventory system. However, the choice between the two systems depends on the size and complexity of the business, as well as its specific inventory management needs.
This video is an invaluable resource if you're considering changing your inventory system. We'll cover the differences between the two systems, as well as the benefits and drawbacks of each. After watching this video, you'll be able to make an informed decision about the best inventory system for your business!
Connect with me on Social Media
www.derrickhay...
/ drdhaywood
/ drdhaywood