Asked by Josmary Marquez on May 20, 2024
Verified
Accounting for the sale of stock is the same for both the cost and the equity methods of accounting for investments.
Equity Method
An accounting technique used to record an investor's proportional share of the profits and losses of an equity-invested company.
Stock
Shares of ownership of a corporation.
- Discern between the multiple methods employed in the accounting of investments.
Verified Answer
DM
Devon MarreroMay 24, 2024
Final Answer :
True
Explanation :
When stock is sold, regardless of the accounting method being used (cost or equity), the transaction is recorded by debiting cash and crediting the investment account for the amount of cash received from the sale. This reduces the investment account and any related earnings or losses are recognized through the income statement.
Learning Objectives
- Discern between the multiple methods employed in the accounting of investments.