All of the following statements regarding inventory shrinkage are true except:
A) Inventory shrinkage refers to the loss of inventory.
B) Inventory shrinkage can be caused by theft or deterioration.
C) Inventory shrinkage is recognized by debiting an operating expense.
D) Inventory shrinkage is determined by comparing a physical count of inventory with recorded inventory amounts.
E) Inventory shrinkage is recognized by debiting Cost of Goods Sold.

Question

Quizplus · Accepted Answer

Inventory shrinkage is recognized by debiting Cost of Goods Sold, not an operating expense as stated in option C. Options A, B, D and E are all true statements regarding inventory shrinkage.

All of the Following Statements Regarding Inventory Shrinkage Are True