Which of the Following Results in a Decrease in the Investment

question 63

Multiple Choice

Which of the following results in a decrease in the investment account when applying the equity method?

• A) Dividends paid by the investor.
• B) Net income of the investee.
• C) Net income of the investor.
• D) Share of gross profit on intra-entity inventory sales for the current year.
• E) Purchase of additional common stock by the investor during the current year.

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Definitions:

Limited Liability

A legal principle that limits an investor's loss in a business venture to the amount of capital they have invested, protecting personal assets from business debts.

Certificate of Limited Partnership

A legal document registered with a state authority to form a limited partnership, outlining key details and compliance.

RULPA

The Revised Uniform Limited Partnership Act, a set of laws adopted by some states to govern the formation, operation, and dissolution of limited partnerships.

Expiration of Term

The end of a period during which an agreement, contract, or tenure was supposed to last.