The Cash Effects of Transactions That Create Revenues and Expenses

question 36

Multiple Choice

The cash effects of transactions that create revenues and expenses are

• A) financing activities.
• B) investing activities.
• C) operating activities.
• D) processing activities.

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Definitions:

Cost Method

A method of accounting where the investment is recorded at its acquisition cost, without subsequent change to market value.

Equity Method

An accounting technique used for recording investments in associate companies where the investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in the investor's share of net assets of the investee.

Stock Investments-Long

Investments in stock securities intended to be held for a long-term period for capital appreciation, dividend income, or both.

Common Stock

Equity securities representing ownership in a company, entitling holders to vote and share in the company's profits.