When the Equity Method of Accounting for Investments Is Used

question 35

Multiple Choice

When the equity method of accounting for investments is used by the investor,the Investments account increases when:

• A)A cash dividend is received from the investee.
• B)The investee reports a net income for the year.
• C)The investor records additional depreciation related to the investment.
• D)The investee reports a net loss for the year.

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Definitions:

Levels Of Significance

A threshold in hypothesis testing that determines the probability at which the null hypothesis is rejected, often denoted by alpha.

P-value

The probability of obtaining test results at least as extreme as the observed results, assuming that the null hypothesis is true.

Test Statistic

A calculated value from sample data that is used in a hypothesis test to determine whether to reject the null hypothesis, based on the likelihood of observing the sample data under the null hypothesis.

Yearly Rate

The amount, level, or number of something calculated or represented over a period of one year.