Q 5.28: Amanda Accountant works for a company that distributes birdseed. While walking through the plant, she notices birdseed scattered all over the floor from a few boxes that have been torn open. It is the end of the quarter. What do you predict Amanda will do? Why?

The answer is:

Amanda should record the wasted birdseeds (inventory loss) by adjusting the inventory account.

A company's inventory account may be incorrect and show errors due to waste or theft. When a loss in inventory is detected, the inventory account should be adjusted to record all the losses due to waste or theft.