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Both is part of inventory system for Perpetual method is calculate average cost price on every transaction in inventory. periodic method depend on the user when he calculate average cost price monthly or annually
Perpetual and periodic inventory systems are accounting methods used to determine products or goods available on hand. Perpetual is more precise as inventory is recorded on the spot, as opposed to the periodic system that relies on physical count of inventory available. Hence, periodic can be performed annually or monthly and is used by companies/businesses that tend to have a lower volume of transactions. Consequently, perpetual is better suited for companies or businesses that have an immense amount of transactions. A corner store that uses a bar code scanner is an example of a business that has frequent transactions and would require a perpetual system to be implemented. In contrast a business with expensive merchandise such as a car dealership or an arts gallery may use the periodic system as transactions are slower and inventory can be tracked every month, quarter or year.
