In business and accounting/accountancy, perpetual inventory or continuous inventory describes systems of inventory where information on inventory quantity and availability is updated on a continuous basis as a function of doing business. Generally this is accomplished by connecting the inventory system with order entry and in retail the point of sale system. In this case, book inventory would be exactly the same as, or almost the same, as the real inventory.
In earlier periods, non-continuous, or periodic inventory systems were more prevalent. Starting in the 1970s digital computers made possible the ability to implement a perpetual inventory system. This has been facilitated by bar coding and lately radio frequency identification (RFID) labeling which allows computer systems to quickly read and process inventory information as part of transaction processing.
Perpetual inventory systems can still be vulnerable to errors due to overstatements (phantom inventory) or understatements (missing inventory) that can occur as a result of theft, breakage, scanning errors or untracked inventory movements, leading to systematic errors in replenishment.
Famous quotes containing the word perpetual:
“Sickness disgusts us with death, and we wish to get well, which is a way of wishing to live. But weakness and suffering, with manifold bodily woes, soon discourage the invalid from trying to regain ground: he tires of those respites which are but snares, of that faltering strength, those ardors cut short, and that perpetual lying in wait for the next attack.”
—Marguerite Yourcenar (1903–1987)