Shrinkage Describes

question 14

Multiple Choice

Shrinkage describes

• A)reducing inventory levels due to sales without replacement of stock
• B)decreasing purchasing power of sales dollars
• C)loss of inventory
• D)increasing inadequacy of floor space as volume increases

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Definitions:

General Journal Entries

Basic accounting records where all day-to-day financial transactions of a business are initially recorded, before being transferred to specific accounts in the general ledger.

Purchase Discounts Lost

Purchase discounts lost refer to the additional amount paid by a buyer for failing to take advantage of the early payment discount offered by a supplier.

Net Method

An accounting technique used to record purchases or sales of goods after deducting any discounts offered at the time of purchase or sale.

Discounts Lost

Charges incurred from not taking advantage of early payment discounts offered by suppliers.