In the Home Depot 2009 financial statements in Appendix A at the end of this textbook, find

Question:

In the Home Depot 2009 financial statements in Appendix A at the end of this textbook, find note 1 to the financial statements. Note 1 summarizes significant accounting policies for Home Depot.

Read the section in Note 1 titled “Merchandise Inventories.”

a. Identify Home Depot’s definition of “shrink.”

b. What are the causes of inventory shrink mentioned by Home Depot? Classify those causes as value-added or non-value-added.

c. What methods does Home Depot use to measure shrink?

d. How does Home Depot account for shrink?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...