Under the Equity Method of Accounting for Long-Term Investments in Common

question 120

Multiple Choice

Under the equity method of accounting for long-term investments in common stock,when a cash dividend is received from the investee company:

• A)the investor's Equity-Method Investment account is increased.
• B)the Dividend Revenue account is increased.
• C)the investor's Equity-Method Investment account is decreased.
• D)no entry is necessary.

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Definitions:

Different Prices

The variation in cost for goods or services, often resulting from location, demand, quality, or negotiation.

Antitrust Laws

Regulations established to prevent unfair competition, monopolies, and practices that harm consumers or restrict trade.

Cooperatives

Organizations owned and operated by a group of individuals for their mutual benefit, where profits and earnings are distributed among the members.

Set Prices

The act of determining the selling cost of goods or services, usually by the manufacturer or by agreement among sellers.