Which of the following statements regarding shrinkage is not correct?
A)Perpetual inventory systems can help managers detect shrinkage.
B)Shrinkage is another term for inventory loss due to theft,error,or fraud.
C)Shrinkage is detected by comparing the balance in the inventory ledger account with the results of the physical inventory count.
D)It is easier to detect shrinkage in a periodic inventory system than in a perpetual inventory system.

Question

Quizplus · Accepted Answer

Shrinkage is another term for inventory loss due to theft,fraud,or error.One of the benefits of a perpetual inventory system is that it allows managers to estimate shrinkage.It cannot be detected in a periodic system because it does not provide an up-to-date record of the inventory that should be on hand when you count it.

Which of the Following Statements Regarding Shrinkage Is Not Correct