Question

The unaccounted-for reduction in the company's inventory that results from theft is called:

a. Physical defalcation
b. Spoilage
c. Shrinkage
d. Misappropriation of intangible assets

Answer 1

In the context of business, the unaccounted-for reduction in a company's inventory due to theft is known as shrinkage.

Step-by-step explanation:

The unaccounted-for reduction in a company's inventory that results from theft is called shrinkage. Shrinkage refers to the loss of inventory that can be attributed to factors such as employee theft, shoplifting, administrative errors, and vendor fraud. This term does not apply to other forms of inventory loss like spoilage, which is the loss of products due to expiration or damage during production, nor does it relate to misappropriation of intangible assets, which refers to the theft or misuse of a company's non-physical assets.