Future Business Leaders of America (FBLA) Marketing Practice Test

What are the two types of inventory systems?

1. Physical inventory and digital inventory

2. Annual inventory and perpetual inventory

3. Physical inventory and perpetual inventory

4. Static inventory and dynamic inventory

The correct answer is: Physical inventory and perpetual inventory

The two types of inventory systems refer to how inventory is tracked and managed within a business. The correct answer highlights both physical inventory and perpetual inventory, which are fundamental concepts in inventory management. Physical inventory involves counting and valuing all inventory items at a specific point in time, often done periodically (e.g., annually). It provides a snapshot of the stock levels and helps in verifying the accuracy of the accounting records. This method is essential for businesses to ensure that reported inventory figures match the actual items available. On the other hand, perpetual inventory refers to an ongoing system that continuously tracks inventory levels in real time. This method typically uses technology, such as inventory management software, to automatically update inventory counts with each transaction, such as sales or purchases. This allows for immediate insights into stock levels and helps in making timely decisions regarding purchasing and sales. Both systems have their uses; the physical inventory system is critical for verification and audit purposes, while the perpetual system is beneficial for operational efficiency and accurate real-time data. The combination of these two methods allows businesses to maintain control over their inventory, ensuring they meet customer demand while minimizing waste and loss. The other choices do not accurately characterize the primary types of inventory systems used in practice. Digital inventory and static/dynamic inventory