Under the Equity Method, the Investment in Associates Account Is

question 55

Multiple Choice

Under the equity method, the Investment in Associates account is increased when the

• A)associate reports net income.
• B)associate pays a dividend.
• C)associate reports a loss.
• D)investment is sold at a gain.

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Definitions:

Market Price

The market rate at which a service or asset is currently available for buying or selling.

Operating Cycle

The average period of time between the purchase of inventory and the collection of cash from receivables, indicating how quickly a company can turn its products into cash.

Sales On Account

Transactions where goods or services are sold to a customer with an agreement that payment will be made at a later date.

Cost Of Goods Sold

The total cost directly associated with the production of the goods sold by a company.