Certified Materials and Resource Professional Practice 2026 – All-in-One Guide to Exam Excellence!

The periodic inventory system requires regular physical inventory counts to determine the amount of inventory on hand. This system does not track inventory levels continuously; instead, it updates inventory records at specific intervals, such as monthly, quarterly, or annually, relying on physical counts to assess stock levels and calculate cost of goods sold.

While the perpetual inventory system typically records inventory transactions in real time, thereby usually eliminating the need for frequent physical counts, businesses may still choose to conduct periodic counts to verify records and ensure accuracy. Therefore, the statement that both systems may use physical counts can be true in certain contexts, but with the periodic system, it is fundamental and required for accurate inventory management. Hence, regular physical counts are essential for the periodic inventory system, making it a focus for maintaining reliability in stock assessments.