1. Shortterm investments:

A.are debt securities

B.represents Accounts Receivable and notes receivable on the balance sheet

C.may be classified as either debt or equity securities

D.are equity securities

2.The journal entry to record the sale of an investment includes a loss on sale of investment for $500. The income statement will reflect:

A.a decrease in net sales of $500

B.other income/loss of $500

C.nothing, since the entry impacts only asset accounts

D.an extraordinary loss of $500

3.Under the equity method of accounting for investments, dividends paid by the investee are recorded by the investor as:

A.a credit to the Investment account of the investor company

B.a credit to Dividend Revenue of the investor company

C.no entry is made to record dividends in this accounting situation

D.a debit to the Investment account of the investor company