If a physical count is not completed and shrinkage has occured, beginning inventory will be overstated in the next period.

Question

Quizplus · Accepted Answer

If a physical count is not completed and there has been shrinkage, the amount of inventory on hand will be less than what is recorded in the accounting system. This means that beginning inventory in the next period will be overstated if this discrepancy is not corrected.

If a Physical Count Is Not Completed and Shrinkage Has