[Tammijones]

An entry to recognize $200 of missing inventory will:

A) decrease assets.
B) increase expense.
C) decrease equity.
D) All of the above.

I know fir sure it is A but Im not sure if it also decreases equity making the final answer D...

[hamzashakaa]

The answer is all of the above because the entry to recognize a lost inventory is:

Dr. Inventory loss (Expense)
Cr. Inventory
So this will increase expense and when expense is increase this will decrease retained earnings which is part of the equity section. And finally the inventory will be reduced which is an asset account.