If the cost method is used to account for a long-term 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 a long-term investment in common stock, dividends received should be credited to the Dividend Revenue account. This is because the cost method only recognizes dividend revenue when it is received, rather than based on the investor's percentage of ownership in the company.

If the Cost Method Is Used to Account for a Long-Term