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

question 41

Multiple Choice

If the cost method is used to account for a long-term investment in common stock

• 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.

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Definitions:

Ileostomy

A surgical operation where a part of the small intestine is diverted to an artificial opening in the abdominal wall, allowing waste to exit the body.

Increase Fluid

A medical or health recommendation to consume more liquids, typically water, to prevent dehydration or support bodily functions.

Chew Food

The process of using teeth to break down food into smaller, more digestible pieces, which is essential for proper digestion.

Excoriation

Injury to the surface of the skin caused by abrasion.