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The periodic and perpetual inventory systems are different methods used to track the quantity of goods on hand. The more sophisticated of the two is the perpetual system, but it requires much more record keeping to maintain.
The periodic system relies upon an occasional physical count of the inventory to determine the ending inventory balance and the cost of goods sold, while the perpetual system keeps continual track of inventory balances. There are a number of other differences between the two systems, which are as follows:
This list makes it clear that the perpetual inventory system is vastly superior to the periodic inventory system. The only case where a periodic system might make sense is when the amount of inventory is very small, and where you can visually review it without any particular need for more detailed inventory records. The periodic system can also work well when the warehouse staff is poorly trained in the uses of a perpetual inventory system, since they might inadvertently record inventory transactions incorrectly in a perpetual system.
Perpetual inventory system with a team of auditors .
Perpetual Inventory system is most detailed and classfied system for inventory. Under perpetual inventory system cost of goods sold is updated every time when inventory is sold and under periodic system all inventories are recorded under purchases account and updated at the end of financial year. So perpetual inventory system is better than the prior in which every inventory can be tracked and indentified easily.
Perpetual Inventory system is the best effective system for inventory. Under perpetual inventory system updated daily basis (received and consumption) records, under periodic system all inventories are recorded under purchases account and updated at the end of financial year. So perpetual inventory system is better than the periodic.