Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following statements regarding stock investments with insignificant influence is FALSE?

Dividends received from these investments are recognized as income.

They are typically accounted for using the equity method.

Insignificant influence generally means owning less than 20% of the voting stock.

They are usually classified as either trading securities or available-for-sale securities.

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Verified step by step guidance

Understand the concept of stock investments with insignificant influence. These are investments where the investor owns less than 20% of the voting stock and does not have significant influence over the investee's operations or decisions.

Review the accounting methods for stock investments with insignificant influence. These investments are typically accounted for using the cost method or fair value method, not the equity method. The equity method is used when the investor has significant influence, usually owning 20%-50% of the voting stock.

Examine how dividends are treated for these investments. Dividends received from stock investments with insignificant influence are recognized as income in the investor's financial statements.

Understand the classification of these investments. Stock investments with insignificant influence are usually classified as either trading securities or available-for-sale securities, depending on the investor's intent and the accounting standards applied.

Identify the false statement. Based on the above clarifications, the statement 'They are typically accounted for using the equity method' is false because the equity method is not used for stock investments with insignificant influence.