If a physical count of inventory indicates that the Inventory account is overstated,an additional adjusting entry is required.

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If a physical count of inventory indicates that the Inventory account is overstated, an adjusting entry is necessary to bring the balance of the account down to the actual value of the inventory on hand. This will ensure that the financial statements accurately reflect the true value of the company's assets.

If a Physical Count of Inventory Indicates That the Inventory