Final answer:
A perpetual inventory system does not account for theft or damaged items and requires physical checks for accuracy.
Step-by-step explanation:
A perpetual inventory system is very helpful but doesn't account for theft or damaged items. In a perpetual inventory system, businesses keep a real-time record of inventory through the use of technology such as barcodes and point-of-sale systems, which constantly update a product's status in the inventory database. However, there can be discrepancies between this digital record and the actual stock available due to events like theft or damage that are not immediately or accurately accounted for in the system.
Even with thorough inventory management, businesses can experience fluctuations in the number of goods available due to inaccuracies or unforeseen circumstances. Companies must routinely check the physical stock against the perpetual inventory records to ensure accuracy and adjust for any unrecorded losses. Effective strategies to reconcile these differences might include periodic physical counts, loss prevention programs, and implementing damage report protocols.