Your Questions About Under The Equity Method The Receipt Of Cash Dividends On An Investment In Common Stock Of

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Daniel asks…

The cost method?

Under the cost method, the receipt of cash dividends on an investment in common stock of Wellington Corporation is accounted for as debit to cash and credit to?

a) Investment in Wellington

b) Retained Earnings

c) Dividend Revenue

d) Dividend Receivable

I know it’s either A or C….
Is the cost method and equity method the same thing???

financi4 answers:

A, but it depends on whose financials you are talking about. If it is yours, then it is Dividend Revenue for tax time. If it is a company, it depends whether or not the company is a financial institution running a fund for investors or not.

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