ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Shrinkage cost is the cost associated with the loss of inventory items that are broken, damaged, spoiled, or stolen.
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True
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False
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Either A or B
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None of the above
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Explanation:
Detailed explanation-1: -Shrinkage can be caused by theft or deterioration. Shrinkage is computed by comparing a physical count of inventory with the recorded amount. Shrinkage is recorded by debiting Cost of Goods Sold. All of the statements are correct.
Detailed explanation-2: -The term inventory shrinkage refers to the discrepancy between the amount of inventory stated in the books of accounts and the actual inventory; this shrinkage typically results from theft, damage, or a counting error.
There is 1 question to complete.