Shrinkage

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Shrinkage

Discrepancy between a firm's actual inventory and its recorded inventory due to theft, deterioration, loss, or clerical problems.

Shrinkage

A reduction in inventory due to a loss, theft, deterioration, or accounting error. Deterioration is a normal part of trading perishable goods. For example, a grocery store selling milk will likely experience shrinkage due to some of the milk spoiling. Shrinkage can be a tax write-off for the company experiencing it.

shrinkage

The loss of inventory encountered in the regular course of business. A firm engaged in transporting grain can expect to lose part of its product to weather, careless handling, and various other factors.