The Adjusting Entry to Reflect Inventory Shrinkage Is a Debit

question 207

True/False

The adjusting entry to reflect inventory shrinkage is a debit to Income Summary and a credit to Inventory Shrinkage Expense.

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Definitions:

Ledger

A book or computer file for recording and totaling economic transactions measured in terms of a monetary unit of account by account type.

Transposition

The accidental rearrangement of digits of a number. Example: 152 → 125.

Error

A mistake in recording transactions or in financial statements, often requiring adjustments or corrections.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to ensure a company's bookkeeping system is mathematically correct.