PGA Merchandising Practice Test 2025 - Free Merchandising Practice Questions and Study Guide

The term that describes the difference between the amount of merchandise expected and the amount actually on hand is referred to as shrinkage. This concept encompasses the losses or discrepancies that occur due to various reasons such as theft, damage, administrative errors, or mismanagement of stock. Understanding shrinkage is crucial for retailers, as it directly affects inventory levels and financial performance. Addressing shrinkage effectively is essential to maintaining accurate stock records and ensuring profitability in merchandising practices.

Markup, gross margin, and inventory variance are all related to inventory and pricing but serve different purposes. Markup refers to the amount added to the cost price of goods to determine the selling price, gross margin is the difference between sales revenue and the cost of goods sold, which shows profitability before other expenses, and inventory variance typically deals with differences between expected inventory value and actual value but does not specifically refer to losses in stock as shrinkage does.