In a perpetual inventory system, what is required to maintain min and max levels?

In a perpetual inventory system, what is required to maintain min and max levels?

• A. No verification is needed
• B. Periodic verification of stock against computer data
• C. Daily manual counts
• D. Annual external audit

Answer: (B)

Maintaining min and max levels in a perpetual inventory system hinges on keeping the system’s stock records accurate by periodically comparing physical stock to what the computer shows. Even though the system updates with every purchase and sale, discrepancies can occur from miscounts, receiving errors, or shrinkage. Regular verification—often done as cycle counts—identifies these differences, corrects the records, and ensures the reorder point (min) and maximum stock level trigger at the right times. If you skip verification, you risk false readings that lead to stockouts or overstock, undermining the min/max controls. Daily manual counts are unnecessary and burdensome, while an annual external audit isn’t the routine method for maintaining day-to-day inventory thresholds.

Maintaining min and max levels in a perpetual inventory system hinges on keeping the system’s stock records accurate by periodically comparing physical stock to what the computer shows. Even though the system updates with every purchase and sale, discrepancies can occur from miscounts, receiving errors, or shrinkage. Regular verification—often done as cycle counts—identifies these differences, corrects the records, and ensures the reorder point (min) and maximum stock level trigger at the right times. If you skip verification, you risk false readings that lead to stockouts or overstock, undermining the min/max controls. Daily manual counts are unnecessary and burdensome, while an annual external audit isn’t the routine method for maintaining day-to-day inventory thresholds.