Is it necessary to do a physical count of inventory if the company is using a...

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Accounting

Is it necessary to do a physical count of inventory if thecompany is using a perpetual system? Why or why not? What sort ofcompany would likely use a perpetual system? What sort of companywould likely use a periodic system? (Provide specificexamples).

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Retail businesses maintain an inventory of finished goods for sale and operating supplies to conduct business A manufacturer also maintains an inventory of finished goods and supplies but also keeps a store of the raw materials used to manufacture finished goods Inventories represent a cost to the organization and may be the largest asset the company owns Companies strive to maintain the lowest level of materials in inventory while still meeting customer demand and orders To exercise control over inventory levels accurate inventory records are essential Counting inventory is necessary in all management systems but the frequency can vary Perpetual Inventory Systems A perpetual system updates inventory records as the company uses raw materials or sells products to customers For example in a retail store when customers purchase a product the cash register or computer system automatically deducts the product from inventory records In a manufacturing organization See Answer

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