What triggers an inventory adjustment?

• A. Discrepancies found in counting, misplacement, or record-keeping errors requiring correction.
• B. When a new asset is added
• C. During annual depreciation
• D. When an asset is transferred between locations

Answer: (A)

An inventory adjustment is triggered by discrepancies between the physical count and what the records show. When counting reveals missing items, duplicates, misplacements, or errors in how assets were recorded, the ledger is adjusted to reflect the actual on-hand inventory. This correction keeps asset records accurate and helps ensure accountability. Adding a new asset, depreciation, or transferring assets between locations don’t address a mismatch in quantity or location on their own, so they don’t trigger an inventory adjustment—their purposes are acquisition, valuation over time, and movement planning, respectively.