Master the Certified Healthcare Leader Challenge 2025 – Lead the Charge to Success!

A perpetual inventory system is characterized by a continuous and real-time tracking of inventory levels, which means that it maintains a running balance of product quantities. This system updates inventory records automatically whenever a transaction occurs, whether it is a sale, a purchase, or adjustments due to returns or damaged goods.

Because of this real-time tracking, businesses can have accurate oversight of their stock levels at any given moment, which facilitates better management of inventory, helps prevent stockouts, and allows for timely reordering. This system contrasts with periodic inventory systems, where inventory counts are done at specific intervals and can lead to discrepancies between physical stock and recorded quantities.

In contrast to the correct answer, other options focus on different aspects of inventory management that do not define the perpetual system. For example, having a fixed amount of products in storage does not account for the dynamic nature of stock levels in a perpetual system. Regular periodic inventory audits are more aligned with a periodic inventory system, where physical counts are conducted at intervals to update records. Lastly, estimates of product sales over time do not reflect the real-time updating characteristic that is essential to a perpetual system.