What is Perpetual Inventory System?
The perpetual inventory system is a stock control approach in which inventory balances and cost of goods sold are updated continuously in real time as each purchase, sale, and return is recorded, supported by barcode scanners and point-of-sale software.
How It Works
- Each transaction updates the inventory ledger immediately.
- COGS calculated and recorded at each sale.
- Periodic physical counts reconcile book vs. actual.
- Requires software (ERP, POS) and barcode infrastructure.
Saudi Context
Saudi retailers, pharmacies, and ZATCA-compliant e-invoicing taxpayers benefit significantly from perpetual systems because every issued e-invoice triggers an automatic inventory reduction and VAT calculation. Cloud accounting solutions like Qoyod integrate POS, inventory, and e-invoicing in a single perpetual workflow.
Example
A Saudi pharmacy sells a SAR 200 medicine. The POS system records: Dr Cash 230 (including SAR 30 VAT), Cr Sales 200, Cr Output VAT 30, then Dr COGS 120, Cr Inventory 120, all in real time.