Peg Owns a December Futures Contract on Cotton

question 114

Multiple Choice

Peg owns a December futures contract on cotton. What is the value of her contract as of the end of the trading day today?

• A) $28,200
• B) $28,840
• C) $28,525
• D) $29,225
• E) $29,525

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Definitions:

Perpetual Inventory System

A perpetual inventory system is a method of tracking inventory in real-time, with continuous updates to inventory records as sales and purchases occur.

Gross Method

An accounting practice where discounts for prompt payment are recorded as reductions of expense if taken.

General Journal Entries

Records of financial transactions not assigned to specific accounts in the general ledger, but recorded in a general journal.

Gross Margin

The difference between revenue and cost of goods sold divided by revenue, expressed as a percentage, indicating the financial health and efficiency of a product or business.