If the Equity Method Is Used to Account for a Long-Term

question 69

Multiple Choice

If the equity method is used to account for a long-term investment in common stock,cash dividends received from the investee are recorded by the investor as:

• A)a debit to Equity-method Investment and a credit to Equity-method Investment Revenue.
• B)a debit to Cash and a credit to Dividend Revenue.
• C)a debit to Dividend Receivable and a credit to Dividend Revenue.
• D)a debit to Cash and a credit to Equity-method Investment

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Definitions:

Useful Reports

Reports that provide valuable information, aiding in decision-making or problem-solving processes.

Financial Gains and Losses

The increase (gains) or decrease (losses) in financial resources, often as a result of investments, business operations, or market fluctuations.

Monitor and Control

Processes involved in tracking a project's progress and making adjustments to ensure objectives are met efficiently.

Double-Entry Bookkeeping System

An accounting method that records every financial transaction in at least two accounts, ensuring that the accounting equation (assets = liabilities + owner's equity) remains balanced.