In the Home Depot financial statements in Appendix A at the end of this textbook, find Note 1 to the financial statements summarizing the company’s significant accounting policies. Read the section in Note 1 entitled “Merchandise Inventories.”
a. How does Home Depot defines inventory “shrink.”
b. Speculate at least three potential causes of Home Depot’s inventory shrink. Classify those causes as being value-added or non–value-added.
c. Describe how Home Depot measures inventory shrink?