Perpetual vs Periodic | Perpetual vs Periodic Inventory System
Perpetual and Periodic are two inventory methods adopted by companies, and it is indeed true that they show some differences between them in their concepts.
Accounting gets updated in the application of periodic inventory system. This is one of the primary advantages of the period inventory method. It is important to know that this kind of update is done by the company at regular intervals, sometimes during the end of every day or every week. Sometimes companies update accounting at the end of a longer period as well.
On the other hand, in the case of the perpetual inventory system, you will find that at the end of each and every inventory transaction, the inventory levels are updated. This is the major difference between perpetual and periodic inventory methods. It is quite natural that the inventory numbers get stagnate between entries in the case of periodic inventory system.
On the other hand, companies get ready to show all sales and receipts during perpetual inventory system. In fact, all the information is regularly updated and get reflected quickly. You can easily find real-time statistics and data in the case of the perpetual inventory method.
One of the primary disadvantages associated with perpetual inventory system is that it requires superb management by skillful personnel. On the other hand, periodic inventory system does not require a great level of management. Customers in fact are helped more by the perpetual inventory system than by the periodic inventory system. This is due to the fact that updating of the information is done with precision and great speed in the case of perpetual inventory system. In short, it can be said that the perpetual inventory system is capable of providing accurate data. These are the important differences between periodic and perpetual inventory systems.