What is perpetual inventory system in Accounting?

It's where you're keeping your inventory account up-to-date with every purchase and sale. It's a more common system these days, especially companies with scanners, which is kept perpetually by the software system used.

Versus the periodic method which just lumps all the purchases together, doesn't update the cost of sales at all, and then it's adjusted all at once at the end of the accounting period. Meaning the inventory is never up to date until that adjustment is made.