When the physical inventory on hand at the end of the accounting period is less than the balance of Merchandise Inventory, the difference is called inventory shrinkage.
At the end of an accounting period, inventory refers to the goods that are still in stock but have not yet been sold. Cost of goods purchased: The price of goods acquired over a time, calculated as purchases less returns and allowances, less discounts, plus freight in.
The value of products still on hand and available for purchase by a company at the end of an accounting period is referred to as ending inventory.
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