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:

Simple Event

An event with only one outcome or a very straightforward outcome in a probability scenario.

Single Die

Refers to one of a pair of small objects, typically cube-shaped, with sides numbered from one to six, used in games of chance.

Monte Carlo

Monte Carlo methods are a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results and estimate uncertain quantities.

Sample Space

The set of all possible outcomes of a statistical experiment.