Which of the following statements regarding inventory shrinkage is not true?
A. Inventory shrinkage is determined by comparing a physical count of inventory with recorded inventory amounts.
B. Inventory shrinkage is recognized by debiting Cost of Goods Sold.
C. Inventory shrinkage can be caused by theft or deterioration.
D. Inventory shrinkage refers to the loss of inventory.
E. Inventory shrinkage is recognized by debiting an operating expense.
Answer: E
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