Indicate Whether Each of the Following Statements Is True or False

Indicate whether each of the following statements is true or false. (Assume a perpetual inventory system.)
_____ a) In a perpetual inventory system, an employee theft is discovered immediately.
_____ b) No adjusting entry is required for inventory losses under a perpetual inventory system.
_____ c) Inventory shrinkage is calculated as the difference between the beginning and ending balances in the merchandise inventory account.
_____ d) In a perpetual inventory system, adjustments for lost, damaged or stolen merchandise are recorded as expenses.
_____ e) The adjusting entry to record inventory losses due to employee theft or shoplifting has a negative effect on the statement of cash flows.