Under the Equity Method of Accounting for Stock Investments, the Investment

question 96

Multiple Choice

Under the equity method of accounting for stock investments, the Investment account is decreased for the receipt of a dividend because:

• A) it is assumed that income will also be received.
• B) the dividend decreases the investee's owners' equity, and therefore the investor's investment decreases.
• C) the dividend decreases the investee's owners' equity, and therefore the investor's investment increases.
• D) no cash is received.