Which of the following statements regarding inventory shrinkage is not true?
A)Inventory shrinkage refers to the loss of inventory.
B)Inventory shrinkage is determined by comparing a physical count of inventory with recorded inventory amounts.
C)Inventory shrinkage is recognized by debiting an operating expense.
D)Inventory shrinkage is recognized by debiting Cost of Goods Sold.
E)Inventory shrinkage can be caused by theft or deterioration.

Question

Quizplus · Accepted Answer

Inventory shrinkage is not recognized by debiting an operating expense, instead, it is recognized by debiting Cost of Goods Sold. Operating expenses are expenses incurred in the normal course of business and are not directly related to inventory losses.

Which of the Following Statements Regarding Inventory Shrinkage Is Not