The Perpetual Method In Inventory Management And Examples Of Applications

Perpetual method is an inventory of every movement or change (freepic)

YOGYAKARTA - In the business world, efficient inventory management is the main key in maintaining operational smoothness and optimizing profits. One of the methods widely used to achieve this goal is the typical method.

This article will thoroughly explore the method of typicality, including its advantages, way of implementing, and its difference to periodic methods. Through this short introduction, it is hoped that you can understand how this method can help improve efficiency and accuracy in business inventory management.

Reporting from the Bekasi City Supplies Information System page, the value of the inventory listed in the Balance and the supply load reported in the Operational Report are strongly influenced by the recording method as well as the assessment method applied to the inventory.

General practices in inventory records include the use of the Perpetual method and the Periodic method. Meanwhile, for inventory assessment, the options available include the First Exit Method (FIFO), the mean method, the special identification method, or the Final Obtain Price Method (HPT).

In the Perpetual recording approach, each inventory movement (change) is recorded directly in accounting notes. Additional inventory, such as purchases, will increase the value of inventory, while supply reductions, such as sales or usage, will reduce inventory value.

Then the decline in inventory value due to use is also recognized as a supply burden. Thus, inventory value updates are carried out in a sustainable manner, without having to wait for the end of the period.

However, physical count of supplies (stock opname) is still needed on a regular basis to ensure regularity between records and the physical condition of the inventory.

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In the periodic recording method, the accounting system does not record any changes that occur in the inventory. The value of the inventory remains static, not affected by the purchase or use of goods.

The only way to update the value of the inventory is to periodically calculate the physical (stock opname) at the end of the period. Therefore, this method is called the periodic method. To make it easier to understand it, here are the short illustrations:

The "Surya" Bakery sells bread. At the beginning of the month, they had 100 breads in supplies with each value of Rp. 5,000,-. So countably the initial inventory value is Rp. 500,000,- (100 bread x Rp. 5,000,-).

One month transaction:

Listing with the Perpetual Method:

Periodic Methods:

\In the case of the Surya Bakery, it can be calculated 100 bread + 200 bread - 150 bread = 150 bread. Furthermore, the value of each inventory will be multiplied by the price of each inventory. With this method, the value of inventory and HPP is only known at the end of the period.

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