Perpetual or Non-Perpetual Inventory Transaction in SAP B1:

When you set up SAP Business One, you need to define how to control the inventory valuation according to business needs and local legal settings. You have two choices for defining inventory valuation: a perpetual inventory system or a non-perpetual inventory system. A perpetual inventory system reflects the value of inventory postings in terms of monetary transactions in the accounting system. These monetary transactions are carried out when items defined as inventory items are received or released from stock.

In a perpetual inventory system, inventory transactions affect both stock levels and stock value. Automatic journal entries for the change in stock value are created in the general ledger. In our course’s business example, we work with a perpetual inventory system so this is what you see in the demonstrations and practice sessions.

The other choice is to use a non-perpetual inventory system in which sales, purchasing, inventory, and production transactions automatically create inventory transactions which affect only the inventory levels and have no effect on the stock value. Transactions in a non-perpetual inventory system do not generate automatic inventory-related monetary entries directly into the general ledger. However, it is possible to get an estimate of inventory value using different inventory reports.

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