CPIM Practice Exam

What is the purpose of a perpetual inventory record?

1. A document that tracks each inventory transaction to maintain a current record

2. A method for counting inventory items at regular intervals

3. A guide for identifying slow-moving inventory items

4. A system that limits access to inventory data

The correct answer is: A document that tracks each inventory transaction to maintain a current record

The purpose of a perpetual inventory record is to maintain an up-to-date account of inventory levels by tracking each inventory transaction as it occurs. This system provides real-time information on inventory quantities, enabling businesses to make informed decisions regarding stock management. With a perpetual inventory system, every addition or subtraction from inventory—whether through sales, purchases, returns, or adjustments—is recorded immediately. This immediate tracking allows for better control over stock levels, enhances inventory accuracy, and helps prevent stockouts or overstock situations. By having current information readily available, businesses can enhance their operational efficiency and make timely decisions about reordering, production scheduling, and overall supply chain management. Other options do not correctly define the function of a perpetual inventory record. For example, counting inventory items at regular intervals pertains more to a periodic inventory system than a perpetual one. Identifying slow-moving items focuses on inventory analysis rather than the tracking of transactions. Lastly, limiting access to inventory data relates to security measures rather than the core purpose of maintaining accurate inventory records.