Inventory shrinkage identified during a physical inventory count at the end of the accounting period as a result of theft, damage, or obsolescence is documented with a decrease to inventory only in a perpetual system.
What is perpetual system?
In contrast to a physical inventory, a perpetual inventory system is a program that continuously evaluates your inventory based on computer records. This method begins with a physical count as a baseline and updates based on purchase receipts and shipment of products.
The most common example of a perpetual inventory system is the usage of wireless barcode scanners in a grocery store. It immediately logs all scanned transactions as they occur on the system. Using this strategy, businesses may easily calculate their current and required stockpiles.
The periodic inventory system gauges inventory levels and selling prices by a periodic physical count. The perpetual system checks inventory levels continually, updating them whenever a product is received or sold.
To learn more about perpetual system visit:https://brainly.com/question/14772126
#SPJ4
