Each transaction listed in 1 through 4 relates to an investment in a long-term equity security. Place the letter that corresponds to the effect (a through h) the transaction has on the accounting equation in the space provided. You may use each letter more than once or not at all.
____ 1. Under the cost method, the investee company declares a cash dividend.
____ 2. Under the equity method, the investee company declares a cash dividend.
____ 3. Under the cost method, the investee company recognizes net income.
____ 4. Under the equity method, the investee company recognizes net income.

Question

Each transaction listed in 1 through 4 relates to an investment in a long-term equity security. Place the letter that corresponds to the effect (a through h) the transaction has on the accounting equation in the space provided. You may use each letter more than once or not at all.
  ____ 1. Under the cost method, the investee company declares a cash dividend.
____ 2. Under the equity method, the investee company declares a cash dividend.
____ 3. Under the cost method, the investee company recognizes net income.
____ 4. Under the equity method, the investee company recognizes net income.

Quizplus · Accepted Answer

The Answer of Each transaction listed in 1 through 4 relates to an investment in a long-term equity security. Place the letter that corresponds to the effect (a through h) the transaction has on the accounting equation in the space provided. You may use each letter more than once or not at all.
  ____ 1. Under the cost method, the investee company declares a cash dividend.
____ 2. Under the equity method, the investee company declares a cash dividend.
____ 3. Under the cost method, the investee company recognizes net income.
____ 4. Under the equity method, the investee company recognizes net income.

Each Transaction Listed in 1 Through 4 Relates to an Investment