Which One of the Following Statements Is False

question 53

Multiple Choice

Which one of the following statements is false?

• A)Under the equity method, revenue is recognized when net income is earned by the associate.
• B)When the equity method is used to account for an investment in shares, dividends received are accounted for as a reduction in the investment account.
• C)Under the equity method, the investment account is adjusted annually for a portion of associate's net income and for dividends received.
• D)Under the equity method, revenue is recognized when net income is earned by the investor which may not be when it is earned by the investee.

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Definitions:

Marginal Revenue

The extra revenue generated from the sale of an additional unit of a product or service.

Marginal Cost

Marginal cost is the cost of producing one additional unit of a good or service, crucial for decision-making processes in economics and business.

Average Total Cost

The total cost divided by the number of goods produced, representing the per-unit cost of production.

Profit-Maximizing Monopoly

A market condition where a single seller dominates, aiming to achieve the highest possible profit by controlling prices and output.