Which of the Following Statements Regarding the Accounting for an Investment

question 19

Multiple Choice

Which of the following statements regarding the accounting for an investment using the equity method is incorrect?

• A) It is used for investments between 20 - 50% of the outstanding voting stock when the investor has the ability to exert significant influence.
• B) The investment account is increased by the proportionate share of investee net income.
• C) The investment account is decreased by the proportionate share of investee dividends.
• D) Investment income equals the proportionate share of investee dividends.

---

Definitions:

Hierarchy

is the system or organization by which people or other entities are ranked one above the other according to status or authority.

Online Viewing

The act of watching or inspecting content over the internet, including videos, websites, and documents.

Reports And Proposals

Documents prepared to provide information on a specific topic (reports) or suggest a course of action towards a specific goal (proposals).

Introductory Elements

Initial components of a document, presentation, or communication that provide background information or set the context for the audience.