For external reporting purposes, inventory shrinkage is usually combined with which account?

Question

Quizplus · Accepted Answer

Inventory shrinkage represents a reduction in the value of inventory, which is attributed to losses resulting from theft, damage, or obsolescence. The cost of these losses should be included in the cost of goods sold (COGS) account as a reduction of inventory. Therefore, the inventory shrinkage amount is combined with the COGS account for external reporting purposes to arrive at the gross profit figure.

For External Reporting Purposes, Inventory Shrinkage Is Usually Combined with Which