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:

Sessile

Describes organisms or parts thereof that are attached directly at the base and are not freely moving.

Leaf

The photosynthetic organ of plants, typically broad and flat, responsible for converting sunlight into energy via photosynthesis.

Transpiration

The process by which water is absorbed by plant roots, moves through plants, and exits as vapor via stomata in the leaves.

Nutrients Distribution

The process by which nutrients are transported and provided to various cells and tissues throughout an organism to support its functions.