What are the differences between periodic and perpetual inventory systems?

The difference between periodic and perpetual inventory systems lies in how often inventory is recorded. The periodic system uses occasional physical counts, while the perpetual system keeps track of inventory balances continuously. Periodic inventory involves counting and recording inventory at predetermined intervals, providing only an approximation of actual inventory. On the other hand, perpetual inventory involves counting and recording inventory as each transaction occurs, providing real-time data on stock levels. The periodic system is less accurate and less costly, while the perpetual system is more accurate but more costly.