When the Cost Method of Accounting for Investments in Another

question 35

Multiple Choice

When the cost method of accounting for investments in another company's voting shares is used, the balance of the investment in shares account is affected by:

• A)the net income or loss of the investee company.
• B)the dividends of the investee company.
• C)the purchase of additional shares of the investee company.
• D)both the earnings and dividends of the investee company.

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Definitions:

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating efficiency in managing inventory.

High Volume

A reference to the large quantity of transactions, activities, or units moved or processed in a given time period, often used in trading and sales contexts.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period. It measures the efficiency of inventory management.