Part a:

i. Explanation of “Perpetual Inventory System”

• Perpetual Inventory System:
  A perpetual inventory system is an inventory management method where inventory records are continuously updated. This system allows businesses to maintain an ongoing record of inventory levels, as all purchases and sales are immediately recorded in the inventory account. The perpetual system provides real-time visibility into inventory quantities, helping management to make informed decisions.

Causes of Differences Between Inventory Account and Physical Count:

1. Theft of Inventory: Loss of stock due to theft can lead to discrepancies between recorded and actual inventory levels.
2. Damage to Inventory: If inventory is damaged but not properly recorded in the inventory accounts, this will create a mismatch.
3. Mis-posting of Inventory Transactions: Errors in recording purchases or sales, such as posting a receipt for one item as another, can lead to discrepancies.
4. Failure to Record Receipts: If new stock is received but not recorded in the inventory account, it will result in lower recorded inventory.
5. Failure to Record Issues: If items sold are not recorded, the inventory balance will be inaccurately high.

ii. Disclosure Requirements for Inventory

IAS 2 requires the following disclosures in the notes to the financial statements:

1. The accounting policy adopted for measuring inventories, including the cost measurement method used.
2. The total carrying amount of inventories, classified appropriately (e.g., raw materials, work-in-progress, and finished goods).
3. The amount of inventories carried at net realizable value (NRV).
4. The amount of inventories written down to NRV and recognized as an expense during the period.
5. Details of any circumstances that led to the write-down of inventories to NRV.
6. The amount of any reversal of write-downs recognized as a reduction in the amount of inventories recognized as an expense in the period, along with the circumstances that led to the reversal.

Part b:

Explanation of “Block-Chain Technology”

• Block-Chain Technology:
  Blockchain technology is a decentralized digital ledger that records transactions across many computers in such a way that the registered transactions cannot be altered retroactively. This technology enables secure, transparent, and tamper-proof recording of transactions, making it particularly useful for financial transactions and contracts.

Disadvantages of Adopting Blockchain Technology:

1. High Implementation Cost: The initial setup and integration of blockchain technology can be expensive, requiring significant investment in hardware, software, and training.
2. Data Modification Challenges: Once data is recorded on the blockchain, modifying it is difficult and often requires substantial effort to rewrite the code across all blocks. This can make correcting mistakes cumbersome.
3. Security Concerns: Although blockchain is generally secure, it is not entirely immune to cyber-attacks, especially if vulnerabilities are present in the applications built on top of the blockchain.