An Inventory Loss from Market Value Declines of $200, 000 $\text { Three Months Ended }$

question 5

Multiple Choice

An inventory loss from market value declines of $200, 000 occurred in August 2010.Marco Sales Company recorded this loss in August after its March 31 and June 30 interim reports were issued.None of this loss was recovered by the end of the year.How should this loss be reflected in Marco's quarterly income statements? $\text { Three Months Ended }$
$\begin{array}{llll}&3/31&6/30&9/30&12/31\\\text { I. } & - & - & \$ 200,000 & - \\\text { II. } & - & - & 100,000 & \$ 100,000 \\\text { III. } & \$ 50,000 & \$ 50,000 & 50,000 & 50,000 \\\text { IV. } & -- & -- & -- & 200,000\end{array}$

• A)I
• B)II
• C)III
• D)IV

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Definitions:

Expected Value

The calculated average result of all possible outcomes of a particular investment or decision, considering both the probability and the impact of each outcome.

Risky Portfolio

An investment portfolio that contains assets with a higher degree of volatility and potential for loss, aiming for higher returns.

Standard Deviation

A statistical measure that quantifies the variation or dispersion of a set of data points.

Sharpe Ratio

A measure that indicates the average return earned in excess of the risk-free rate per unit of volatility or total risk, assessing the performance of an investment.