Shrinkage Refers to

question 215

Multiple Choice

Shrinkage refers to

• A)the declining number of small privately owned retail stores due to economic hard times.
• B)breakage, theft, and fraud by customers and employees.
• C)the percentage of inventory that is damaged or unsalable because of product failure.
• D)the loss of profits in clothing items that are returned because of inferior materials.
• E)polycarbonate packaging that encases products with a tamper-resistant plastic seal.

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Definitions:

Closing Entries

journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts, thereby preparing the accounts for the next period.

Capital Account

A financial statement that shows the changes in a company's equity throughout an accounting period, including contributions from and distributions to owners.

Withdrawals Account

An account used to track money taken out of a business by its owner(s) for personal use.

Income Summary

An account used in closing process to collect all revenue and expense account balances before determining net income or loss.