A Company Has Been Using the Equity Method to Account

question 37

Multiple Choice

A company has been using the equity method to account for its investment. The company sells shares and does not continue to have significant influence. Which of the following statements is true?

• A) A cumulative effect change in accounting principle must occur.
• B) A prospective change in accounting principle must occur.
• C) A retrospective change in accounting principle must occur.
• D) The investor will not receive future dividends from the investee.
• E) Future dividends will continue to reduce the investment account.

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Definitions:

Tech Support Department

A business division focused on providing assistance and advice regarding a company's products or services, especially related to software, hardware, or other technology issues.

Routing Calls

The process of directing phone calls to the correct department or individual within a business or organization.

Customer Cost Analysis

The process of analyzing the costs associated with acquiring, serving, and retaining customers to determine profitability.

Order Fulfillment Department

The division of a company responsible for processing and delivering orders to customers.