When Using a Perpetual Inventory System, the Adjusting Entry Required

Multiple Choice

When using a perpetual inventory system, the adjusting entry required when merchandise inventory records do NOT agree with the physical count

A) has an effect on Cost of Goods Sold.
B) has no effect on Cost of Goods Sold.
C) requires reporting a loss when actual is higher than records.
D) requires reporting a gain when actual is lower than records.