Inventory Valuation for Theft Losses Steps:

• Identify key inventory equation: Beginning inventory + Purchases = Cost of Goods Sold + Ending inventory + Losses (e.g., theft).
• Isolate theft value: Losses = (Beginning inventory + Purchases + Other additions) - (Ending inventory + COGS + Other deductions).
• Determine required data: Need beginning inventory (1) and physical count of ending inventory (3) to compute shrinkage, assuming standard adjustments for sales/purchases.
• Verify: Theft value requires pre-theft and post-theft inventory levels, excluding normal sales.

Why C is correct:

• C (1 and 3) provides beginning inventory and ending physical count, essential per accounting standards (e.g., IAS 2) to calculate shrinkage as theft.

Why the others are wrong:

• A includes unnecessary 2 (likely sales data), inflating requirements.
• B adds irrelevant 4 (possibly adjustments), not core to basic theft calc.
• D omits critical 1 and 3, relying only on secondary items.

Not enough information on exact definitions of 1-4.

Final answer: C