All of the Following Statements Regarding Inventory Shrinkage Are True

question 193

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

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Definitions:

Compounded Monthly

A method of calculating interest where the accrued interest is added to the principal sum each month, resulting in 'interest on interest.'

Compounded Monthly

Interest on a deposit or loan is calculated each month and added to the principal, increasing the amount on which future interest is computed.

Mortgage Loan

A loan used to purchase a real estate property, secured by the property itself.

RRSP

A Registered Retirement Savings Plan, which is a retirement savings and investing vehicle for employees and the self-employed in Canada.