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Essay text:
Shrinkage should be
Dr. Operating Expense
Cr. Inventory
However, there are some industries that perform a Debit to Cost of Goods sold even though these items were never sold. I would suggest Operating Expense is a better approach.
3. An example of an industry that uses LIFO is the mining industries.
Assuming they have a pit, they are filling it up with coal they dig up. The first coal they sell will be from the top (last coal put in the pit), and last one sold will be the ones in the bottom (first coal put in the pit), therefore LIFO. There are many other industries with a similar setting where the last one put in would be the first one sold...
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