If the Cost Method Is Used to Account for a Long-Term

question 136

Multiple Choice

If the cost method is used to account for a long-term investment in ordinary shares,

• A) it is presumed that the investor has significant influence on the investee.
• B) the earning of net income by the investee is considered a proper basis for recognition of income by the investor.
• C) net income of the investee is not considered earned by the investor until dividends are declared by the investee.
• D) the Investment account may be, at times, greater than the acquisition cost.

Distinguish between various terms relevant to merchandising accounting, such as sales discounts, sales returns, and the role of freight in inventory cost.

Calculate and interpret vital formulas within merchandising financial statements, including gross profit and net income calculations.

Appreciate the nuances of inventory systems and their effect on the financial position statement.

Classify companies as merchandising entities versus other business types based on their primary source of revenue.

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Definitions:

Competency Modeling

A process for identifying and categorizing the knowledge, skills, and abilities required for effective performance in a job or organization.

Criterion-Related Validity

The extent to which a measure is related to an outcome, indicating the effectiveness of tests or procedures used in hiring or assessment processes.

Tectorial Membrane

A structure located in the cochlea of the inner ear, playing a key role in the process of sound transduction to the auditory nerve.

Organ of Corti

The Organ of Corti is a structure located within the cochlea of the inner ear, containing hair cells responsible for converting sound vibrations into electrical signals.