What does the perpetual system of recording involve?

The perpetual system of recording stock involves maintaining continuous, real-time records of inventory transactions as they occur. This system updates inventory levels immediately after each purchase or sale, which allows businesses to always know their current stock levels without having to wait for a specific reporting period, such as year-end.

In this context, keeping stock records refers to the ongoing documentation of inventory increases and decreases, which is a key component of the perpetual inventory system. Additionally, conducting end-period verification is important for cross-referencing and ensuring the accuracy of these records, confirming that the physical stock matches what the records indicate.

This real-time tracking enables businesses to manage their inventory more efficiently, reducing the likelihood of stockouts or overstock situations, and ultimately supporting better decision-making regarding purchasing and sales. Other options, while they may suggest approaches to inventory management, do not accurately represent the continuous nature of the perpetual system, which is characterized by its emphasis on up-to-date stock records.