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The difference between the perpetual book inventory and the physical inventory count is called shrinkage. The book inventory is a record of what ought to be on hand in view of what has been received, what has been sold and price changes. Physical inventory count is the volume and value of all the goods actually on hand.
There are various way to prevent shrinkage.
1. paperwork error.
2. Internal theft.
3. shoplifting.
4. Overages. so on
