Inventory shortages are debited to
A) Merchandise Inventory
B) Cost of Goods Sold
C) Inventory Short/Over
D) Sales

Question

Quizplus · Accepted Answer

Inventory shortages represent a decrease in the quantity of merchandise available for sale. As a result, they are recorded as an expense in the current period as part of the cost of goods sold calculation. Option A is incorrect because it represents the value of the merchandise that was initially purchased but not the loss that occurred. Option C is used to record the overage or shortage in inventory book value at the end of the period. Option D is incorrect since sales represent revenue, not an expense.

Inventory Shortages Are Debited to