Perpetual inventory system is an accounting method to keep track of inventory on a continuous basis as and when goods are bought and sold. It involves the usage of software and technology to update the inventory records in real-time. To account for perpetual inventory, businesses need to keep track of inventory purchases, sales, returns, and adjustments. The inventory records must reflect the cost of goods sold, the current inventory levels, and the inventory valuation methods used, such as LIFO or FIFO. Proper management of perpetual inventory system helps in maintaining accurate inventory records, efficient stock management, and prevents stock-outs or overstocks.