Periodic and Perpetual Inventory

The Difference between Periodic and Perpetual Inventory

Periodic and perpetual inventory systems use different ways to count stock.

Where periodic inventory systems are used, inventory is valued by counting with a periodic stocktake. So this means stock is physically counted on a certain date.

In contrast, perpetual inventory systems update inventory automatically. This happens as sales are made and more inventory is purchased. So inventory must be easily identified to be scanned as sales and purchases are made.

This infographic shows the differences on the Income Statement.

What are Perpetual and Periodic Inventory Systems?