Adams Consultancy Has the Following Account Balances at the End

question 8

Multiple Choice

Adams Consultancy has the following account balances at the end of the current accounting period. The normal gross profit percent is 40%. What is the estimated ending inventory as determined by the gross profit method?

• A)$190,000
• B)$415,000
• C)$196,000
• D)$490,000

---

Definitions:

Trading Securities

Investments in debt or equity securities bought and held primarily for selling them in the short term to generate income on short-term price differences.

Unrealized Gain or Loss

Refers to the increase or decrease in the value of investments that a company holds but has not yet sold, which affects the financial statements only when realized.

Income Statement

A financial report that shows a company's revenues, expenses, and net income over a specific period, highlighting its operating performance.

Equity Method

An accounting technique used for recording investments in other companies, where the investment is initially recorded at cost and adjusted for the investor's share of the investee's profits or losses.