Asked by Winnie Chiam on Jul 02, 2024
The method of accounting for long-term investments in equity securities that most closely fits the requirements of accrual accounting is the
A) market method
B) fair value method
C) equity method
D) straight-line method
Accrual Accounting
An accounting method that records revenues and expenses when they are earned or incurred, regardless of when the cash transactions happen.
Equity Method
An accounting technique used to assess the earnings attributed to a company's investment in another company, reflecting its share of the investee's profits or losses.
Fair Value Method
An accounting approach where assets and liabilities are assessed and reported at their current market values, rather than their historical cost, reflecting their true economic worth.
- Grasp the principles and apply the equity method within investment accounting.
Learning Objectives
- Grasp the principles and apply the equity method within investment accounting.