1. The "Equity Method" to account for an investment in shares should be used when the investor: a. Own between 20% and 50% of the common shares with voting rights. b. Own between 25% and 50% of the common shares with voting rights. c. Own less than 20% of the common stock. d. None of the above is correct. 2. If the investor accounts for the equity method, the cash dividends received: a. They are credited to Dividend Revenue. b. They do not require entry because the net gain has already been recorded based on the corresponding proportion in the investor's books. c. They are credited to the Stock Investment account. d. They are credited to the Income from Stock Investment account. 3. When a company owns more than 50% of the common stock of another company: a. Affiliated financial statements are prepared. b. Consolidated financial statements are prepared. c. Controlled financial statements are prepared. d. Significant financial statements are prepared. 4. Corporacin Wapa owns 3,000 common shares of Corporacin Wapa Amrica. The Wapa Amrica Corporation has 25,000 shares circulating. Wapa Amrica paid $4 per share in cash dividends to shareholders. The entry to record receipt of these dividends: a. Debit Cash $12,000; credits Long Term Investment for $12,000 b. Debit Long Term Investment $12,000; credit Cash for $12,000 c. Debit Cash $12,000; Credit Dividend Revenue $12,000 d. Debit Cash $12,000; credits Unrealized Gain-Equity $12,000 5. Trading Securities are those that: a. They are classified as long-term investments b. They will be sold close to maturity c. The company expects to sell them at a profit (increase in price). d. None of the above is correct