Perpetual inventory system has a widespread use, because it provides high level of control over inventories.

In this system, companies continuously update the inventory account whenever a transaction occurs.

The purchases of inventories are directly debited to inventory account, while the cost of inventories are credited when they are sold.

In perpetual inventory system, companies use “Purchase” account to record their purchases of inventories.

Perpetual
inventory system provides the companies opportunity to
compare the amounts of inventories in accounting records stolen or wasted goods are not detected, because and in warehouses.