Jennifer works the front counter at Burger King. Often her friends drop by when she's working and she gives them free food (inventory) without ringing up any sales. She figures it's OK as long as she isn't caught

1. Assume that Burger King uses a perpetual inventory system. Describe how a perpetual inventory system helps to identify inventory shrinkage.
2. Is it ethical to give your friends free food as long as you aren't caught?

1. With a perpetual inventory system, the inventory account is updated every time merchandise (hamburgers) is purchased or sold. When the company takes an actual physical count, it can compare the numbers from the count with the perpetual records. In this case, because inventory is given away but not recorded as a sale, the perpetual records will show more inventory on hand than the physical count.
2. No. It doesn't matter whether you will be caught. It is unethical to give away your
employer's inventory.