For each transaction numbered 1 through 4 below, identify which effect (a through f) the transaction is most likely to cause. You may use each letter more than once or not at all.
_____ 1. The cost method is used for an investment in long-term equity securities, and the investee company declares a cash dividend.
_____ 2. The equity method is used for an investment in long-term equity securities and the investee company declares a cash dividend.
_____ 3. The cost method is used for an investment in long-term equity securities and the investee company recognizes net income.
_____ 4. The equity method is used for an investment in long-term equity securities and the investee company recognizes net income.

Question

For each transaction numbered 1 through 4 below, identify which effect (a through f) the transaction is most likely to cause. You may use each letter more than once or not at all.
  _____ 1. The cost method is used for an investment in long-term equity securities, and the investee company declares a cash dividend.
_____ 2. The equity method is used for an investment in long-term equity securities and the investee company declares a cash dividend.
_____ 3. The cost method is used for an investment in long-term equity securities and the investee company recognizes net income.
_____ 4. The equity method is used for an investment in long-term equity securities and the investee company recognizes net income.

Quizplus · Accepted Answer

The Answer of For each transaction numbered 1 through 4 below, identify which effect (a through f) the transaction is most likely to cause. You may use each letter more than once or not at all.
  _____ 1. The cost method is used for an investment in long-term equity securities, and the investee company declares a cash dividend.
_____ 2. The equity method is used for an investment in long-term equity securities and the investee company declares a cash dividend.
_____ 3. The cost method is used for an investment in long-term equity securities and the investee company recognizes net income.
_____ 4. The equity method is used for an investment in long-term equity securities and the investee company recognizes net income.

For Each Transaction Numbered 1 Through 4 Below, Identify Which