If the Physical Count of Inventory Revealed $158,000 of Inventory

question 90

Multiple Choice

If the physical count of inventory revealed $158,000 of inventory on hand and the inventory records reported $163,000, what would be the necessary adjusting entry to record inventory shrinkage?

• A) debit Inventory, $158,000; credit Cost of Goods Sold, $158,000
• B) debit Inventory, $5,000; credit Cost of Goods Sold, $5,000
• C) debit Cost of Goods Sold, $163,000; credit Inventory, $158,000
• D) debit Cost of Goods Sold, $5,000; credit Inventory, $5,000

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Definitions:

Consumer Tastes

Preferences and desires that influence the buying behavior of consumers and demand for products and services.

Economic Profits

The surplus achieved when total revenue exceeds the total costs, including both explicit and implicit costs.

Accounting Profits

The difference between total revenue and explicit costs, representing the net income of a business according to standard accounting practices.

Competitive Economy

An economic system where businesses operate in a free market, competing for consumers on price, quality, and service.