INVENTORY SHRINKAGE Definition

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INVENTORY SHRINKAGE is a reduction in the physical amount of inventory that is not easily explainable. The most common cause of shrinkage is theft.

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DISCLOSURE PRINCIPLE states that any and all information that affects the full understanding of a companys financial statements must be include with the financial statements. Some items may not affect the ledger accounts directly. These would be included in the form of accompanying notes. Examples of such items are outstanding lawsuits, tax disputes, and company takeovers.

DEBTOR is the party against who one has a claim.

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