How is inventory typically adjusted at the end of the accounting period?

Adjusting inventory at the end of the accounting period is primarily done through a physical count of the inventory on hand. This involves physically counting the items available for sale and comparing this figure to the recorded inventory amounts in the accounting system. This comparison is essential to identify any discrepancies due to factors such as theft, loss, damage, or errors made in record-keeping.

After the physical count, adjustments may be made to the inventory records to ensure they reflect the actual quantity of goods on hand. Accurate inventory records are crucial for financial reporting, pricing strategies, and maintaining proper stock levels. The adjustment process ensures that the financial statements accurately represent the company's inventory assets, which is a key component of the balance sheet.

In relation to the other choices, comparing recorded amounts to projected sales does not directly reflect the actual inventory on hand and may lead to inaccurate reporting. Adjusting for estimated receivables pertains to customer payments rather than inventory levels. Inflating reported values based on forecasts can lead to misleading financial statements and does not reflect actual inventory practices. Thus, the correct method for adjusting inventory involves a direct comparison of the physical count to the recorded amounts.