Under the Cost Method of Accounting for Dividends

question 262

Multiple Choice

Under the cost method of accounting for dividends

• A) Investment Revenue is credited when dividends are received.
• B) the Investment account is credited when the investee reports a net income.
• C) the Investment account is credited when dividends are received.
• D) Investment Revenue is credited when the investee reports a net income.

---

Definitions:

Prices Constant

An assumption in economic analysis that prices remain unchanged over a specific period, allowing for the examination of other variables' effects without price fluctuations.

Diminishing Marginal Rate

The principle that as the quantidade of a variable input increases, with all other inputs fixed, a point will be reached where the additions to output will begin to decrease.

Substitution

The economic principle describing how consumers or producers replace one good or service with another in response to changes in price or other factors.

Substitution Effect

The substitution effect describes a change in consumption patterns due to shifts in relative prices, where consumers prefer cheaper alternatives when the price of a good rises, keeping their utility level constant.