If the Physical Inventory Is Less Than the Amount in the Accounting

question 31

Multiple Choice

If the physical inventory is less than the amount in the accounting inventory records, this is known as

• A) Inventory Short/Over
• B) Inventory Shrinkage
• C) Inventory Adjustment
• D) Inventory Discrepancy

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Definitions:

Operating Leases

Operating leases are lease agreements that allow for the use of an asset but do not grant ownership rights of the asset to the lessee.

Note Disclosure

A detailed explanation added to financial statements providing additional context or information about the statements.

Future Cash Flows

Projections of cash revenues minus cash expenses, representing the amount of money a company expects to receive or pay out over a specific period.

Capital Lease

A lease agreement in which the lessee essentially buys an asset and pays for it over time, classifying the lease as a financial transaction in the balance sheet.