Compared to the Equity Method, the Cost Method of Accounting

question 47

Multiple Choice

Compared to the equity method, the cost method of accounting for an investment in a profitable company results in:

• A)lower earnings and lower cash flows.
• B)higher earnings and higher cash flows.
• C)lower earnings and no effect on cash flows.
• D)higher earnings and no effect on cash flows.

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Definitions:

Abnormality

A deviation from the normal or typical structure, function, or behavior, which may indicate a pathological condition.

Tachycardia

A condition characterized by an abnormally fast heart rate, often defined as a heart rate over 100 beats per minute in adults.

Athletic Adult

An individual who engages in regular physical activity that goes beyond general fitness, focusing on specific sports or intensive training regimens.

Peripheral Vascular Resistance

Refers to the resistance that blood vessels outside the heart offer against blood flow, affecting blood pressure.