CPIM Practice Exam

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What is periodic inventory?

A one-time inventory check
A physical inventory taken at recurring intervals
Inventory adjustments made throughout the year
A method for cycle counting assets

The correct answer is: A physical inventory taken at recurring intervals

Periodic inventory refers to a method of managing and tracking inventory by conducting physical counts at regular intervals, such as monthly, quarterly, or annually. This approach allows businesses to determine the quantity and condition of inventory on hand and assess the possible discrepancies that may have occurred due to sales, wastage, or theft. By taking the time to conduct these counts regularly, companies can ensure their records reflect actual inventory levels, helping with effective financial reporting, cost control, and inventory management. This method stands in contrast to ongoing inventory management systems that continuously update inventory records in real-time based on sales and purchases, which can provide more immediate insights but may require a more complex system.