Being a Cost Analyst of an Automobile Company, you have suggested adopting a perpetual inventory system for inventory maintenance. On what factors a perpetual inventory system would be suggested?
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* Your answer must NOT exceed 100 words. Irrelevant details have negative impact, so be careful.
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Under this system, a complete and continuous record of movement of each inventory item is maintained. Perpetual records are useful in preparing monthly quarterly or other financial statement. Record used is normally a “store ledger card” specifying quantity wise receipt, issue and balance together with values in chronological sequence. 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.
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