Asked by Michelle Carnes on May 12, 2024
Verified
Inventory shrinkage is recorded when
A) merchandise is returned by a buyer
B) merchandise purchased from a seller is incomplete or short
C) merchandise is returned to a seller
D) there is a difference between a physical count of inventory and inventory records
Inventory Shrinkage
The loss of products between purchase and sale, typically due to theft, damage, or errors in counting.
Physical Count
Physical count involves the manual counting and verification of the quantities of inventory or stock a business holds at a specific point in time.
Inventory Records
Documentation of a company's inventory levels, transactions, and movements, crucial for managing and valuing stock.
- Understand the concept of inventory shrinkage and its recording in accounting.
Verified Answer
BG
Briana GallardoMay 19, 2024
Final Answer :
D
Explanation :
Inventory shrinkage is the term used when the actual physical count of inventory is less than the recorded amount in inventory records. This can occur due to theft, damage, or errors in recording transactions. Therefore, the correct option is D.
Learning Objectives
- Understand the concept of inventory shrinkage and its recording in accounting.