When the Cost Method of Accounting for Long-Term Investment in Shares

question 17

Multiple Choice

When the cost method of accounting for long-term investment in shares is employed,the receipt of a dividend on those shares is recorded as a credit to:

• A) the investment asset.
• B) dividend revenue.
• C) dividend declared.
• D) retained profits.

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Definitions:

Secured

Refers to a loan or obligation that is backed by collateral, reducing the risk associated with lending.

Unsecured

Refers to loans or debts that are not backed by collateral, presenting a higher risk to lenders.

Fresh Start

A bankruptcy procedure that allows a debtor to eliminate debts and start over financially, often involving reorganization plans for businesses or individuals.

Reorganization Value

The value of a company's assets during a reorganization, reflecting their fair market value rather than book value.