Not recording an accrued expense will have the following effect on the financial statements:

liabilities on the balance sheet will be overstated.

expenses on the income statement will be understated.

expenses on the income statement will be overstated.

liabilities on the balance sheet will be understated

Which of the following statements regarding inventory shrinkage is false?

Multiple Choice

Inventory shrinkage refers to the loss of inventory.

Inventory shrinkage is determined by comparing a physical count of inventory with recorded inventory amounts.

Inventory shrinkage is recognized by crediting an operating expense.

Inventory shrinkage is recognized by debiting Cost of Goods Sold.