Which of the Following Statements Regarding Shrinkage Is Not True

question 99

Multiple Choice

Which of the following statements regarding shrinkage is not true?

• A)Perpetual inventory systems can help managers detect shrinkage.
• B)Shrinkage is another term for inventory loss due to theft,error,or fraud.
• C)Shrinkage is detected by comparing the balance in the inventory ledger account and the results of the physical inventory count.
• D)It is easier to detect shrinkage in a periodic inventory system than in a perpetual inventory system.

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Definitions:

Internal Control

Internal control comprises the procedures and processes implemented by a business to safeguard assets, enhance the reliability of accounting records, and promote efficiency.

Authority

The power or right given to an individual or body to make decisions, issue commands, and enforce obedience within a specific scope or area.

Physical Controls

Security measures that are implemented to protect assets, including locks, surveillance cameras, and alarm systems.

Safeguard Assets

Measures or strategies implemented by a company to protect its assets from theft, damage, or misuse.