An Investor Receives a Stock Dividend on a Long-Term Investment

question 43

Multiple Choice

An investor receives a stock dividend on a long-term Investment in Available-for-Sale Securities.What journal entry is required?

• A)debit Cash and credit Investment in Available-for-Sale Securities
• B)debit Cash and credit Dividend Revenue
• C)debit Investment in Available-for-Sale Securities and credit Investment Revenue
• D)No journal entry is required.

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Definitions:

Perfectly Competitive Firm

A company that operates in a market where there are many buyers and sellers, and where no single buyer or seller can influence the price of the product.

Horizontal Demand

Describes a demand curve that is perfectly elastic, indicating that even a very small change in price would lead to an infinite change in the quantity demanded, typically theoretical and not found in real-world markets.

Product Differentiation

Strategies used by companies to make their products appear unique from those of competitors.

Price

The amount of currency estimated, needed, or presented in exchange for an item.