Why Use a Perpetual System?
Response to the following problem:
You are a consultant for the ABC Consulting Company. You have been hired by Eddie's Electronics, a company that owns 25 electronics stores selling radios, televisions, compact disc players, stereos, and other electronic equipment. Since the company began business 10 years ago, it has been using a periodic inventory system. However, Mark Eddie just returned from a seminar where some of his competitors told him he should be using the perpetual inventory method. Mr. Eddie is not sure he should believe his competitors.
He wants you to advise him about his inventory choices and make a recommendation about the inventory method he should use.