In what scenario would an inventory adjustment be required?

• A. When the asset is new and unrecorded
• B. When there is a discrepancy between counting and records
• C. When the asset is leased
• D. When no changes occurred

Answer: (B)

Inventory adjustments are made to bring the records in line with what you actually have. When a physical count doesn’t match the quantities listed in the system, you update the records to reflect the real count, and you may also note any loss, theft, or damage that caused the difference. That’s why the scenario where counting reveals a discrepancy with the records is the one that requires an adjustment.

If the asset were new and unrecorded, you’d record it in the system rather than adjust an existing balance. If the asset is leased, the need for an adjustment depends on whether the count matches the records; leasing itself isn’t what triggers an adjustment. If no changes occurred, there’s nothing to adjust.