define shrinkage ( retail subject)
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loss of profits
Shrinkage is the loss of inventory that can be attributed to factors such as employee theft, shoplifting, administrative error, vendor fraud, damage, and cashier error. ... This concept is a key problem for retailers, as it results in the loss of inventory, which ultimately means loss of profits
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➾An allowance made for reduction in the takings of a business due to wastage or theft.
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➾ In accounting, inventory shrinkage occurs when a retailer has fewer items in stock than in the inventory list due to clerical error, goods being damaged, lost, or stolen between the point of manufacture and the point of sale.
➾ This affects profit: if shrinkage is large, profits decrease.
★ Hope you understand this concept mate ★
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