Develop brief answers to each of the following questions:

1. Where in the financial statements are investment transactions reported?

2. What would cause an Allowance to Adjust Short-Term Investments to Market account that has a negative (credit) balance at the beginning of the year to have a positive (debit) balance at the end of the year?

3. When a company uses the equity method to record its proportionate share of the income and dividends of a company in which it has invested, what are the cash flow effects?

Discussion Questions