If the cost method is used to account for an investment in common stock, dividends received should be
A) credited to the Stock Investments account.
B) credited to the Dividend Revenue account.
C) debited to the Stock Investments account.
D) recorded only when 20% or more of the stock is owned.

Question

Quizplus · Accepted Answer

When the cost method is used to account for an investment in common stock, dividends received should be credited to the Dividend Revenue account. The Stock Investments account is used to record the initial purchase of the stock and any subsequent purchases or sales, while the Dividend Revenue account is used to record the receipt of dividend payments.

If the Cost Method Is Used to Account for an Investment