March 31, 2019

Features Of Perpetual Inventory System

Perpetual inventory system is more reliable than other methods of inventory control. In this system, inventory counts are updated regularly after transactions (materials received or sold). Reliability, less cost and time consuming, quick detection of frauds, less investment etc. are some features of perpetual inventory. This post highlights some notable features of this system of recording inventory. 

Key characteristics or features of perpetual inventory system can be highlighted as follows:

1. Reliable Technique

It is a most reliable method of inventory control. Record of inventory is made after every issue and receive of materials.

2. Less Cost And Time

It facilitates regular recording and checking of stock which avoids the time and cost of annual stock taking.

3. Avoids Unnecessary Capital

Perpetual inventory system helps to avoid unnecessary capital blocked in maintaining inventories.

4. Regular Checking

There is a continuous checking of stock by an experienced staff.
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5. Detection Of Discrepancies

Regular and continuous checking helps to detect frauds and discrepancies easily. It helps to take appropriate steps to avoid discrepancies on time.

       
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6. Quick Valuation

Because of up-to-date record of inventory, it ensures quick valuation of stock which helps to prepare profit and loss account on time.

7. Less Investment

Perpetual inventory system helps to reduce wastage and misuse of materials which helps to minimize the investment in raw materials.