Perpetual inventory

Updating on-hand quantity and value continuously as you receive, issue, transfer, and sell — not only after a year-end stock count.

Also searched as: continuous inventory, live stock ledger, perpetual stock system, inventory subledger

Periodic inventory leaves stock value alone until you count and compute COGS by residual. Perpetual inventory posts every movement into a stock ledger so quantity and value are always available for ops and the G/L control account.

Perpetual does not remove the need to count. It changes what a count means: you investigate variances against a live book, rather than discovering the entire year’s shrinkage in one closing entry.

Small shops with a handful of SKUs can survive periodic inventory. The moment you have multiple locations, consignments, or same-day availability promises, perpetual is the adult system.

Weighted-average move on a perpetual ledger

Opening: 50 units at $8.00 ($400). Buy 50 at $10.00 ($500). Sell 30 units.

  1. On-hand after buy = 100 units; value = $400 + $500 = $900.
  2. Weighted average = $900 ÷ 100 = $9.00.
  3. COGS on sale of 30 = 30 × $9 = $270.
  4. Remaining on hand = 70 units × $9 = $630.

The perpetual ledger shows 70 on hand at $630 and COGS $270 without waiting for a year-end count.

Related modules

Related terms

FAQ

Does perpetual replace stock takes?

No. Counts still prove the book. Perpetual makes the variance specific instead of absorbing a year of noise into one plug.