Under the Equity Method of Accounting for an Investment

question 98

Multiple Choice

Under the equity method of accounting for an investment

• A)Dividend Income is credited when dividends are received.
• B)an Unrealized Gain account is credited when the investee reports net income.
• C)the Investment account is credited when the investee reports net income.
• D)the Investment account is credited when dividends are received.

---

Definitions:

Purchase Price

The amount of money paid to buy goods or services.

Merchandise Inventory

Goods or products that a retailer or wholesaler has purchased and intends to sell to customers.

Periodic System

An inventory system where inventory levels are updated in the accounting records on a periodic basis, typically at the end of an accounting period, rather than after each purchase or sale.

LIFO Method

The "Last In, First Out" inventory valuation method, where the most recently produced items are recorded as sold first.