Johnson Co.'s physical count of inventories was lower than the inventory quantities shown in its perpetual records. This situation could be the result of the failure to record:
A) sales.
B) sales returns.
C) purchases.
D) purchase discounts.

Question

Quizplus · Accepted Answer

If sales and/or sales returns were not recorded in the perpetual records, then the physical count of inventory would be lower than the recorded quantities. This is because goods that have been sold or returned would not be included in the physical inventory count. Failure to record purchases or purchase discounts would not directly affect the physical count of inventory.