Ashton Company uses the perpetual inventory system. The company's inventory account had a $6,600 balance as of December 31, Year 1. A physical count of inventory shows only $5,900 of merchandise in stock at December 31, Year 1. How will recognizing the missing inventory affect the company's financial statements?

Question

Quizplus · Accepted Answer

Recognizing the missing inventory will increase expense as it will be recorded as a loss or cost of goods sold, reducing net income.

Ashton Company Uses the Perpetual Inventory System