Which inventory method is updated continuously as transactions occur?

Which inventory method is updated continuously as transactions occur?

• A. Physical inventory
• B. Perpetual inventory
• C. Annual inventory
• D. Static inventory

Answer: (B)

Perpetual inventory systems update the inventory records with every transaction. Each time something is bought or sold, the on-hand quantity and the cost of goods sold are adjusted instantly, so stock levels and profitability data stay current in real time. This contrasts with physical inventory counts, which occur at specific intervals to determine actual stock and reconcile records; annual inventory counts once a year; and static inventory, which implies no dynamic updating. So the method that stays updated continuously as transactions occur is the perpetual inventory system.

Perpetual inventory systems update the inventory records with every transaction. Each time something is bought or sold, the on-hand quantity and the cost of goods sold are adjusted instantly, so stock levels and profitability data stay current in real time. This contrasts with physical inventory counts, which occur at specific intervals to determine actual stock and reconcile records; annual inventory counts once a year; and static inventory, which implies no dynamic updating. So the method that stays updated continuously as transactions occur is the perpetual inventory system.