A perpetual inventory system is a method used by businesses to continuously track their inventory levels in real-time. This system updates inventory records automatically whenever a sale or purchase occurs, providing accurate and up-to-date information about stock on hand. It helps businesses manage their inventory more effectively and reduces the risk of stockouts or overstocking. By using a perpetual inventory system, companies can also streamline their accounting processes. This system often integrates with other software, such as point-of-sale (POS) systems and accounting software, allowing for seamless data flow and better financial reporting. Overall, it enhances operational efficiency and decision-making.