Main benefits of advantages of perpetual inventory system can be studied as follows:
1. Time And Cost Saving
Perpetual inventory system practice real time recording of inventory or stock. It avoids long (time consuming) and costly traditional method of recording stock. So, it is less time consuming and less costly system of maintaining the record of inventory.
2. Accuracy
In perpetual inventory system, the ledger is updated in real time. It means inventory record is maintained after each transaction. So, it helps accurate reporting of inventory level at any time.
Perpetual inventory system provides up-to-date information about the record of stock to the management. So, management can take decision regarding re-order level of the material.
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4. Preparation Of Financial Statement
Perpetual inventory system facilitates the preparation of financial statement by providing the actual value of closing stock at the end of the accounting period.
5. Preventing Errors And Discrepancies
Perpetual inventory system helps to prevent errors and discrepancies by identifying mistakes and frauds immediately. It helps to take corrective actions on time.
6. Material Control
Proper control of materials and supplies is possible in perpetual inventory system. Regular checking of receipt and issue of material helps to maintain proper recording of the stock, It also helps to control store expenses and investment in materials and supplies.
7. Effective Control
Perpetual inventory system ensures effective controlling by facilitating internal audit system.
