What inventory method keeps a running record of balance on hand?

The method that maintains a continuous record of inventory levels on hand is known as the perpetual inventory system. This system tracks inventory in real-time, updating the balance as inventory is purchased and sold. It allows managers to see current stock levels at any point, facilitating better decision-making regarding ordering and stock management.

The perpetual inventory method contrasts with other approaches that do not provide an ongoing account of stock levels. For example, a par stock system sets a specific quantity to be maintained and does not actively track the inventory, while a min-max system establishes minimum and maximum stock levels but does not record the fluctuations between those points on an ongoing basis. Similarly, a physical inventory involves a complete count of stock at specific intervals, rather than maintaining a continuous record. Therefore, the perpetual system is essential for businesses needing tight control over inventory and accurate up-to-date information.