All of the Following Statements Regarding Inventory Shrinkage Are True

question 52

Multiple Choice

All of the following statements regarding inventory shrinkage are true except:

• A)Inventory shrinkage refers to the loss of inventory.
• B)Inventory shrinkage is determined by comparing a physical count of inventory with recorded inventory amounts.
• C)Inventory shrinkage is recognized by debiting an operating expense.
• D)Inventory shrinkage is recognized by debiting Cost of Goods Sold.
• E)Inventory shrinkage can be caused by theft or deterioration.

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Definitions:

Encoding Failure

A situation where the brain’s attempt to store information is unsuccessful, leading to the inability to recall this information later.

Telephone Keypad

An assembly of push-buttons on a telephone, each button representing a set of letters and numbers, used for dialing and typing.

Alphabetically Sequenced Letters

An ordered arrangement of letters based on the conventional sequence of the alphabet.

Encoding Failure

A situation in which the brain fails to create a memory link for information, making it difficult to remember at a later time.