Question

Which of the following statements regarding inventory counts is not correct?

A) Companies need to perform a physical count of their inventory at least yearly regardless of which inventory system is being used.

B) A perpetual inventory system does not require a physical count during the accounting period to determine cost of goods sold.

C) In a perpetual inventory system, the inventory count is compared to the inventory account balance to reveal shrinkage.

D) If a company uses a perpetual inventory system and the inventory count at the end of the accounting period is greater than the balance in the inventory ledger account, there must have been shrinkage.

Answer

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