The Receipt of Dividends from an Investment Affects the Investment

question 3

Multiple Choice

The receipt of dividends from an investment affects the investment account when which of the following methods is used?

• A)Cost method.
• B)Equity method.
• C)Fair value model.
• D)Fair value through other comprehensive income model.

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Definitions:

Discount Period

The time period during which a debtor can pay less than the full amount owed to clear a debt, typically as an incentive for early payment.

Multiple-Step Income Statement

An intricate financial report that distinguishes between operating revenues and expenses and those that are non-operating in order to determine the net income.

Single-Step Income Statement

A simplified income statement that calculates net income by subtracting total expenses from total revenues in one step.

Net Operating Income

Net operating income is the total profit of a company after operating expenses are subtracted from gross revenue but before deducting taxes and interest.