Accounting for the sale of stock is the same for both the cost and the equity methods of accounting for investments.

Question

Quizplus · Accepted Answer

When stock is sold, regardless of the accounting method being used (cost or equity), the transaction is recorded by debiting cash and crediting the investment account for the amount of cash received from the sale. This reduces the investment account and any related earnings or losses are recognized through the income statement.

Accounting for the Sale of Stock Is the Same for Both