Which Statement Is True Concerning Unrecognized Profits in Intra-Entity Inventory

question 49

Multiple Choice

Which statement is true concerning unrecognized profits in intra-entity inventory sales when an investor uses the equity method?

• A) The investor and investee make reciprocal entries to defer and recognize inventory profits.
• B) The same adjustments are made for upstream and downstream sales.
• C) Different adjustments are made for upstream and downstream sales.
• D) No adjustments are necessary.
• E) Adjustments will be made only when profits are known upon sale to outsiders.

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Definitions:

Decisions

The process of making choices between alternatives, typically after evaluating information and considering the potential outcomes.

Natural Justice

The principle of fairness in all legal and administrative decisions, ensuring processes are conducted without bias.

Fair Hearing

A judicial or quasi-judicial procedure ensuring an unbiased tribunal, notice, an opportunity to be heard, and the right to present and refute evidence.

Harassment

Occurs when a member of an organization treats an employee in a disparate manner because of that person’s sex, race, religion, age, or other protected classification.