What is a key characteristic of perpetual inventory systems?

In a perpetual inventory system, a key characteristic is that records are updated continually throughout the period. This means that every time inventory is purchased or sold, the inventory records reflect these transactions immediately. This real-time tracking allows businesses to maintain an accurate and up-to-date view of their inventory levels at all times.

This characteristic is crucial for effective inventory management, as it provides immediate insight into stock levels, helps in decision-making regarding reorder points, and reduces the chances of stockouts or overstocking. By employing technology and software, companies can automate this process, ensuring that inventory counts and values are always current without the need for lengthy reconciliations at the end of the accounting period, which would be the case in a periodic inventory system.