Aurum Services Acquired 100,000 Shares of Gamma Metals on January

question 88

Multiple Choice

Aurum Services acquired 100,000 shares of Gamma Metals on January 1, 2015. Gamma pays a cash dividend of $0.25 per share on March 2, 2015. With the current investment, Aurum Services holds 8% of Gamma. In the journal entry on March 2, 2015:

• A)Long-term Investments-Available-for-Sale will be credited.
• B)Dividend Revenue will be credited.
• C)Long-term Investments-Held-to-Maturity will be debited.
• D)Long-term Investments-Available-for-Sale will be debited.

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Definitions:

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid to the lender over a set period.

Utility Function

A mathematical representation that shows the relationship between the overall satisfaction or happiness a consumer derives from consuming various goods and services.

Risk Averse

The tendency of individuals or entities to prefer certainty over uncertainty, avoiding investments or actions that could result in losses.

Wealth

The accumulation of valuable resources and assets, such as money, real estate, and investments, which can be used to produce income or held as a store of value.