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The adjusting entry for investments contains a credit to Investments for $651. The income

The adjusting entry for investments contains a credit to Investments for $651. The income statement will reflect:

A) revenue of $651

B) an extraordinary gain of $651

C) other comprehensive income/loss of ($651)

D) nothing, because gain/loss is not reported on the income statement

12) The Gain/Loss on the sale of Available for Sale Investment is reported as other income or other expense on the income statement.

13) Investment in subsidiaries involves purchasing 25% of the organization's shares.

14) With an investment in a subsidiary, under private enterprise GAAP, the investment can be accounted for using consolidation, or the equity or cost method.

15) A purchase of 20% of JetNew stock by Zip would be accounted for using the equity method.

16) A decrease in a long term equity investment account due to a chance in market value involves a debit to the other comprehensive income/loss account.

17) The cost method of accounting for portfolio investments is usually used when the investor holds less than 20% of the voting shares of the investee.

18) The journal entry to record the receipt of a cash dividend will include a credit to Retained Earnings.

19) The receipt of a stock dividend will require a memorandum entry in the accounting records to denote a new number of shares of stock held as an investment.

20) An investment in common shares acquired during 2010 at a cost of $46,000 has a market value on December 31, 20

Dec 09 2019 View more View Less

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