When the Equity Method Is Used to Account for Long-Term

question 89

Multiple Choice

When the equity method is used to account for long-term investments in stock, the receipt of dividends is recorded as a credit to

• A) The Investment account
• B) Dividend revenue
• C) Cash
• D) Interest revenue

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Definitions:

Concurrent Validity

The construct validity of a measure is assessed by examining whether groups of people differ on the measure in expected ways.

Face Validity

Refers to the extent to which a test appears to measure what it claims to measure, based on superficial judgment.

Convergent Validity

A type of validity that assesses whether measures that should be related, based on the study hypotheses, are actually related.

Discriminant Validity

The extent to which a test or measure differentiates between distinct groups or constructs, showing it is not correlating too highly with measures from different constructs.