If the cost method is used to account for an investment in common stock, dividen

ID: 2585852 • Letter: I

Question

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. debited to the Stock Investments account.

c. credited to the Dividend Revenue account.

d. recorded only when 20% or more of the stock is owned.

Which of the following is not a true statement about the accounting for long-term debt investments?

a. The investment is initially recorded at cost.

b. The cost includes any brokerage fees.

c. Debt investments include investment in government and corporation bonds.

d. The cost includes any accrued interest.

a. credited to the Stock Investments account.

Under cost method, dividends received should be credited to the Dividend Revenue account.

Thus ans C is correct.

Long-term debt does not includes any accrued interest.

Thus ans d is correct

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