If Posthorn Corporation Accounts for Its Investment in Stamp Company

question 25

Multiple Choice

If Posthorn Corporation accounts for its investment in Stamp Company using the equity method, what entry will the company make to record the dividends received from Stamp Company for 2016?

• A)
• \[\begin{array} { | l | l | l | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Cash } & \$ 16,000 & \\
• \hline \text { Dividend Income } & & \$ 16,000 \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { | l | l | l | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Cash } & \$ 16,000 & \\
• \hline \text { Investment in Stamp Company } & & \$ 16,000 \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | l | l | l | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Investment in Stamp Company } & \$ 16,000 & \\
• \hline \text { Dividend Income } & & \$ 16,000 \\
• \hline
• \end{array}\]
• D)No entry requireD.

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Definitions:

Internal Consistency

A measure of the reliability of a test or scale, indicating how well the items on the test measure the same construct or concept.

Content Validity

The degree to which a test or measurement accurately represents the concept it intends to measure, based on the thoroughness of the content included.

Concurrent Validity

The extent to which test results correlate with those of previously established tests of the same ability or trait.

Content Validity

The extent to which a test represents all facets of the concept or constructs it is supposed to measure.